China stocks retreat 7-month high following Mideast calm
HONG KONG: China and Hong Kong shares weakened on Thursday after hitting multi-month peaks, as a relief rally over the ceasefire in the Middle East took a breather.
At market close, the Shanghai Composite index declined 0.2 per cent after briefly touching the highest level since December during earlier trades. China's blue-chip CSI300 index lost 0.4 per cent.
The brokers sector lost 1.7 per cent to give up some of the gains seen on Wednesday and the rare earth sector declined 1.2 per cent.
Offsetting the onshore losses, the CSI Defence Index gained 0.4 per cent while banking shares advanced 1 per cent.
In Hong Kong, the benchmark Hang Seng Index snapped a four-day winning streak and weakened 0.6 per cent, pulling back from a three-month high hit at the previous close.
While markets have been soothed by a ceasefire between Israel and Iran, traders were on edge about Trump's July 9 deadline on imposing tariffs on trading partners and his pressure on the Fed.
China markets are expected to face some volatility pressure between July and August following the recent gains, and investors are advised to remain cautious in the short term, analysts at Morgan Stanley said in a note.
Analysts at Goldman Sachs said in a note on Thursday that they have observed strength across China assets from the trading desks with long-only funds and hedge funds both getting more active. Clients' feedback now expect more retail participation following the recent rally.
Still, the upcoming earnings season and corporate guidance for the second half will be the key focus as there's limited visibility on macro support, they added.
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