HONG KONG: China stocks closed higher on Monday as defensive sectors including liquor and consumer staples jumped on rising consumer prices.
At market close, the Shanghai Composite index was up 0.5 percent at 4,018.6 after swinging between gains and losses during the morning session. China’s blue-chip CSI300 index added 0.4 percent.
Leading the gains, the CSI Liquor Index rallied more than 5 percent to the highest in nearly two months. The consumer staple sector jumped 3.4 percent in the biggest single-day gain since April.
China’s producer price deflation eased in October and consumer prices returned to positive territory, data showed on Sunday, as the government steps up efforts to curb over-capacity and cut-throat competition among firms.
However, analysts say deflationary pressures are not yet over and additional policy measures are needed to further spur demand.
Weighing on broader markets on Monday, the artificial intelligence sector index slid as much as 3 percent to a two-week low, as a correction for global tech shares continued over valuation concerns.
Markets climbed back to gains on optimism that an end to the historic US government shutdown was in sight. The US Senate moved forward with a measure aimed at reopening the federal government and ending a 40-day shutdown that has caused an unprecedented economic data blackout.
“Investors will probably wait for the next Fed meeting and resolution of the government shutdown” to see if liquidity conditions improve, Kevin Liu, CICC’s research managing director and strategist, said in a note.
Before that, they would likely seek downside protection in dividend stocks while looking for entry points for growth themes during corrections, he said.
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