Sino-U.S. Trade War Adds Volatility to Chinese and Hong Kong Markets

China and Hong Kong stocks experienced volatility amid mixed signals from the U.S. regarding tariff reductions. While China's blue-chip index declined, technology shares led a downturn in Hong Kong's Hang Seng Index. U.S. Treasury Secretary expressed a willingness to ease tariffs, yet no unilateral action was planned, leaving investors uncertain.

China and Hong Kong stocks faced a turbulent session on Thursday as the United States hinted at possible tariff reductions against China but refrained from taking unilateral action. Investors found themselves at a crossroads, uncertain about the future path of the ongoing Sino-U.S. trade tensions.

The morning session saw China's blue-chip CSI300 Index and the Shanghai Composite Index erasing initial gains, closing down 0.1%. Meanwhile, Hong Kong's Hang Seng Index fell 1%, with technology shares dragging it down. This comes in response to U.S. Treasury Secretary Scott Bessent's statement highlighting the unsustainability of current high tariffs under the Trump administration.

Concerns grow as questions about the timing and impact of potential tariff changes remain. While there is speculation about possible negotiations, China President Xi Jinping is unlikely to act first. The tech sector bore the brunt of sell-offs, with Hong Kong's Hang Seng Tech Index plunging 2%. In contrast, Chinese banking shares surged following the government's $72 billion bank recapitalization initiative.

(With inputs from agencies.)