HONG KONG: Chinese shares notched up marginal gains on Tuesday whereas those in Hong Kong fell, as the initial euphoria over a Sino-US trade truce involving the reduction and delay of tariffs gave way to caution.
An agreement between US and Chinese officials after weekend talks in Geneva led to a rally in global markets and the US dollar. However, fears that further negotiations could prove a slog still lingered and weighed on investor sentiment.
China’s blue-chip CSI300 Index edged up 0.1%, while the Shanghai Composite Index added less than 0.2%.
In Hong Kong, the Hang Seng China Enterprises Index lost 2% and the benchmark Hang Seng Index weakened 1.9%, retreating from a six-week high. The Hang Seng Tech Index fell 3.3%.
The trade deal exceeded market expectations but investors were confused and worried what changes might come after the “temporary peace”, Jefferies analysts said in a client note.
“Institutional investors are becoming more cautious,” and odds for policy support from Beijing in the coming months may drop following the unexpectedly positive trade outcome, they said.
US Treasury Secretary Scott Bessent, speaking after talks with Chinese officials in Geneva, said on Monday the sides had agreed on a 90-day pause on tit-for-tat trade actions.
The US will cut extra tariffs imposed in April on Chinese imports to 30% from 145% and Chinese duties on US imports will fall to 10% from 125%, the sides said on Monday.
On Tuesday, the energy sector sub-index advanced 0.6% and the banking sub-index climbed 1.5%, leading onshore markets higher.
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