Trade Tensions Weighs on Chinese Stocks Amid Tariff Deadline Anxiety

Chinese and Hong Kong markets experienced a downturn on Monday as worries about U.S. trade policies grew more acute ahead of the looming tariff deadline on July 9, with inflation data poised to further unsettle investors. China's blue-chip CSI300 fell by 0.4%, while the Shanghai Composite Index remained mostly unchanged. In Hong Kong, the Hang Seng index witnessed a 0.1% decline.

Market sentiment suffered despite China not facing immediate tariff hikes due to a trade truce with the U.S. President Donald Trump's unpredictable policy shifts continued to create unease, particularly after he threatened an additional 10% tariff on any nations supporting the BRICS group's 'Anti-American policies'. Trump indicated nearing completion of various trade deals, with announcements of elevated tariffs expected by July 9 and implementation planned for August 1, prompting forecasts of increased market volatility.

The downturn was led by a 1.1% drop in the AI sector, a 1.8% slide in the energy sector, and a 0.8% decrease in the liquor distillers index. The medical services sector contracted by 0.7% following China's decision to limit European Union medical device purchases in response to previous EU restrictions. However, there was an uptick in property developers' stocks in China and Hong Kong, rising by 1.4% and 0.9% respectively, buoyed by assurances from the domestic housing regulator to stabilize home prices amid concerns over the country's economic health and enduring deflationary trends.

(With inputs from agencies.)