China markets trim gains as stimulus, trade talk optimism wane
HONG KONG: Chinese stocks pared early gains on Wednesday, while the bond and currency markets barely budged, as traders said the central bank's latest easing measures offered few surprises and doubts persisted over prospects for a US-China trade deal.
The blue-chip CSI 300 Index climbed 0.6% while the Shanghai Composite Index added 0.8%, both pulling back from an earlier advance.
Hong Kong's benchmark Hang Seng Index closed flat after rallying more than 2% at the open.
Reaction was muted in bond and currency markets, with investors saying monetary easing was already priced.
China's central bank will lower the benchmark interest rate and inject liquidity into the banking system, among other easing measures, Governor Pan Gongsheng said on Wednesday, to stimulate economic growth and mitigate the impact of a trade war.
The announcements came just hours after US and Chinese officials said US Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China's top economic official He Lifeng in Switzerland this weekend for trade talks.
'The market had been expecting reserve requirement ratio (RRR) and rate cuts since late last year, so there's nothing surprising,' said Yu Huiwu, hedge fund manager at Junze Fund Management Co.
'Contact between China and the US on trade is something people expected would happen sooner or later, but a trade deal is not yet in sight.'
China's government bond yields showed mixed reactions to the rate decision. One-year bond yield dropped 1.45 bps, while the 10-year yield rose 2 bps.
Prices of China's 30-year treasury futures, which move inversely to yields, fell 0.64%.
'The market has not seen an increase in fiscal stimulus yet,' Xiong Yuxiang, strategist at Caitong Securities said, explaining the market's relative calmness. 'Easing liquidity is just the first step' toward fresh fiscal policies.
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