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China Market rebounds 3.1% from 11-week low

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Headline indices of the Mainland China equity market rebounded from 11-week low on Friday, 10 May 2019, as investors chased for bottom fishing recently battered stocks on speculation Beijing may announce more policy easing and support measures if the latest U. S. tariff hikes on $200 billion worth of Chinese products heightens pressure on China's economy. At closing bell, the benchmark Shanghai Composite Index gained 3.1%, or 88.26 points, to 2,939.21. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 3.83%, or 57.90 points, to 1,568.62. The blue-chip CSI300 index grew 3.63%, or 130.75 points, to 3,730.45.

Sentiment was brightened in early morning by reports that U. S. President Donald Trump said he received a beautiful letter from Chinese President Xi Jinping and could have phone talks with the Chinese leader. But a wave of selling hit mid afternoon around the time the Trump administration carried out the tariff hike. The import duty was raised to 25 percent from 10 percent after the United States and China failed to find a solution to their trade dispute in the first round of the two-day ministerial-level negotiations in Washington on Thursday.

China immediately said in a statement it is forced to retaliate, but didn't specify how, after the U. S. hiked levies on more than $200 billion in goods. Negotiations between Xi Jinping's top trade envoy and his U.

S. counterparts in Washington were due to resume on Friday morning Washington time. President Donald Trump earlier insisted a deal was still possible to reach this week, even as he reiterated plans to raise the tariffs.

China's stocks recouped lost ground again in the late afternoon as Beijing took steps to stabilize the market after the U. S. imposed additional tariffs on the nation's goods. Chinese state-backed funds were active in buying domestic equities on Friday after they had slumped in the wake of the Trump administration imposing the biggest hit yet to China's exports to the U. S.

The next focus is on whether there will be any reference to additional tariffs on $325 billion of Chinese goods. U. S. President Donald Trump has threatened to impose a 25 percent levy on $325 billion of Chinese products not yet subject to tariffs.

Investors had largely been betting on a U. S.-China trade deal soon, and the escalation comes as China's economy has started to show signs of stabilisation, thanks to a flurry of growth-boosting measures.

CURRENCY NEWS: China's yuan strengthened against the U. S. dollar on Friday, despite China's central bank setting the midpoint of its daily trading band at its weakest level in 3-1/2 months before the market open. China's yuan finished the domestic trading session up 0.2% at 6.8118 per dollar, but was still down 1.13% for the week

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, May 10 2019. 21:26 IST