China Market rises on tariff cuts

Mainland China equity market finished session higher on Thursday, 06 February 2020, as investors risk sentiments underpinned by positive developments on the U.S.-China trade front. At closing bell, the benchmark Shanghai Composite Index added 1.72%, or 48.42 points, to 2,866.51. The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 2.9%, or 48.60 points, to 1,727.24. The blue-chip CSI300 index was up 1.86%, or 71.25 points, to 3,899.78.

Investor sentiment was bolstered after the China Ministry of Finance said on Thursday it would halve tariffs on hundreds of U.S. imports from 14 Feb. 2020, which could help improve negotiating conditions for a second phase of a trade accord after the two countries signed off on an interim deal last month. The adjustment would apply to about $75 billion worth of imports from the U.S. that China slapped with tariffs on Sept. 1, 2019, according to a separate statement on the ministry's website.

Beijing's decision caught many traders off guard and investors interpreted it as a fresh sign of further de-escalation in the Sino-U.S. trade dispute at a time when China is struggling to contain a fast-spreading coronavirus epidemic that has killed more than 500 people.

CURRENCY NEWS: China's yuan surged against the dollar on Thursday, after sentiment got a boost from the government's decision to cut tariffs on some U.S. goods. Onshore spot yuan CNY=CFXS was changing hands at 6.9611, 142 pips firmer than the previous late session close. Offshore yuan CNH=D3 also followed the trend, strengthening to a high of 6.9590 per dollar.

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