China Stocks Plummet: Factory Data Dents Market Rally

On Thursday, Chinese stocks suffered their steepest one-day decline since April, affected by disappointing factory data and the Politburo's moderate policy signals. The Shanghai Composite Index closed down by 1.2% at 3,573.21, with the CSI300 index dropping 1.8%, both representing their largest declines since early April.

This pullback halted a recent rally that had briefly placed the Shanghai index into bull territory, despite the market gaining 3.7% in July marking its best month since September. Investors showed disappointment at the Politburo's commitments to manage 'disorderly competition' without any major stimulus measures, even as manufacturing data revealed a fourth consecutive month of contraction.

Investor sentiment remained low ahead of the upcoming U.S.-China trade talks as expectations for substantial progress or policy change were minimal. This mood contributed to steep declines in the real estate sector, which fell 4.3%, along with commodities-related shares. Conversely, a slight gain was observed in AI-related stocks, owing to concerns over potential security risks boosting domestic chipmakers.

(With inputs from agencies.)