China Stocks end mixed amid US-Iran tensions

Mainland China equity market finished session lower after giving up early gains on Monday, 06 January 2020, with investor sentiment dampened by declines in New York shares late last week amid rising tensions between the United States and Iran, shrugging off positive cues such as progress in US-China trade talks and Beijing's policy support to prop up the economy. At closing bell, the benchmark Shanghai Composite Index eased 0.01%, or 0.38 point, to 3,083.41. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.44%, or 7.83 points, to 1,768.68. The blue-chip CSI300 index was down 0.38%, or 15.66 points, to 4,129.30.

Investors were concerned about worsening U.S.-Iran relations after news that the U.S. military had killed Qassem Soleimani, the head of Iran's Islamic Revolutionary Guard's Quds Force. The strike also killed Abu Mahdi al-Mohandes, the deputy head of the Popular Mobilization Forces, which is an umbrella for dozens of militias that are part of the Iraqi security apparatus but include factions that swear allegiance to Iran's supreme leader.

Tensions in the Gulf region escalated with Tehran vowing to avenge the death of General Soleimani and its allies in Iraq pressing to expel US troops from the country. Iraqi Prime Minister Adel Abdul-Mahdi condemned the overnight strike, calling it a flagrant breach of the terms underwriting the presence of US forces in the country. Iran's supreme leader, Ayatollah Ali Khamenei, declared three days of mourning for Soleimani's death and said that a hard revenge awaits criminals, responsible for the attack.

On the trade front, the South China Morning Post reported on Sunday a Chinese delegation plans to travel to Washington on Jan. 13 for the signing of the US-China Phase 1 trade deal.

Gold miners pocketed most of the gains, with Gansu Ronghua Industry Group (600311 CH) and Chifeng Jilong Gold Mining (600988 CH) both soaring by 10.08%. Shandong Gold Mining (600547 CH) jumped by 9%.

Energy shares rallied as oil prices gained, with index heavyweight PetroChina rising as much as 5.5%.

ECONOMIC NEWS: China Private Sector Growth Eases In December- China's private sector growth eased in December as both manufacturing and services logged weaker growth, survey data from IHS Markit showed Monday. The Caixin composite Purchasing Managers' Index fell to 52.6 from 53.2 in November. However, a score above 50 indicates expansion. The Purchasing Managers' Index for the service sector dropped to 52.5 from a seven-month high of 53.5 a month ago. Manufacturing output rose solidly at the end of the year, despite the rate of increase easing to a three-month low.

CURRENCY NEWS: The yuan was quoted at 6.976 per U.S. dollar, 0.16% weaker than the previous close of 6.965.

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