Chinese Markets Extend Gains for Third Day on Stimulus Hopes and Trade Talks Optimism

Chinese equities extended their rally for a third consecutive session on Thursday, buoyed by investor optimism over possible economic stimulus measures from Beijing and renewed hopes for a trade de-escalation with the United States. The sustained advance comes in the wake of President Donald Trump’s surprise 90-day pause on tariffs for most countries, coupled with a dramatic increase in duties on Chinese goods to 125 percent, which has intensified the urgency for domestic economic support from Chinese policymakers.

Highlights:

• Chinese shares continue upward trend on hopes of stimulus and potential US trade dialogue

• Hong Kong-listed Chinese stocks gained as much as 4.6% before trimming gains

• Policymakers are expected to unveil new measures to support housing, consumption, and innovation

Also Read :- White House Signals 90-Day Strategic Pause in Tariffs: Cooperative Nations Promised Trade Incentives

Markets React Positively Amid Stimulus Hopes and Tariff Developments

A key benchmark of Hong Kong-listed Chinese firms surged as much as 4.6 percent in early Thursday trading before trimming gains to 1.5 percent. The onshore CSI 300 Index also advanced by as much as 1 percent before the midday break, marking the third straight session of gains for Chinese equities. Investors have interpreted the evolving trade dynamic with the United States as a potential trigger for more forceful fiscal and monetary support from Chinese authorities.

President Trump’s escalation of tariffs on Chinese goods—raising them to 125 percent—has sharpened Beijing’s resolve, while also fueling expectations that Chinese policymakers will move swiftly to counteract the economic drag. Trump’s concurrent 90-day pause on tariffs for more than 75 other countries has created a complex backdrop for China, which is now navigating both increased trade pressure and emerging investor optimism for reform-driven stimulus.

Highlights:

• Chinese stocks gain on back of stimulus expectations

• Investors bet on fresh economic measures to offset trade-related headwinds

• Trump’s dual-track approach: pressure on China, pause for allies

Focus Turns to Pro-Growth Policy as Consumer Deflation Deepens

Thursday’s rally in Chinese equities was supported further by fresh economic data that underscored the need for stimulus. Figures showed consumer deflation persisted into a second month in March, signaling subdued domestic demand in the world’s second-largest economy. With downward pressure building, China’s top leadership was scheduled to hold an emergency meeting on Thursday to weigh new economic support measures. Bloomberg News reported that the discussions would prioritize stimulus for housing, consumer spending, and technological advancement.

Monetary policy adjustments may also be in play. The onshore yuan weakened to its lowest level against the US dollar since the 2008 global financial crisis, a move widely interpreted by traders as evidence of Beijing’s increasing tolerance for currency depreciation to cushion the economy. Market watchers are now anticipating rate cuts, liquidity injections, or other central bank actions designed to preserve financial stability amid rising geopolitical tensions.

Highlights:

• Consumer deflation highlights urgency for stimulus

• Leadership meetings focus on housing, consumption, and tech innovation

• Yuan weakness suggests monetary easing may be imminent

Beijing Mobilizes State-Backed Funds and Corporate Buybacks to Prop Up Markets

As part of a coordinated effort to stabilize financial markets, Chinese authorities this week mobilized state-owned investment vehicles to purchase equities and ETFs. Additionally, Beijing encouraged listed companies to initiate or expand stock buyback programs to shore up investor confidence. These interventions have bolstered market sentiment and provided a temporary buffer against the deteriorating trade environment.

Support from domestic investors also contributed to the rally in Hong Kong equities, as mainland buyers continued their aggressive accumulation of stocks listed in the Asian financial hub. On Thursday alone, mainland investors purchased HK$6 billion (approximately $773 million) in Hong Kong shares, building on an unprecedented HK$35.6 billion buying spree in the previous session.

Highlights:

• State-backed funds and corporate buybacks support domestic equities

• Mainland investors drive strong inflows into Hong Kong markets

• Equity stabilization efforts coincide with policy deliberations on stimulus

US-China Tariff Tensions Intensify, But Market Eyes De-escalation Potential

Despite the bullish sentiment in Chinese markets, the underlying trade standoff between Washington and Beijing remains volatile. The escalation of tariffs by both sides has contributed to global uncertainty, though President Trump’s comments have left the door open for negotiations. The White House emphasized its position that countries who refrain from retaliation will be “rewarded,” while Beijing reiterated its willingness to engage, even as it vowed to “fight to the end.”

Beijing responded to Trump’s prior 104 percent tariff with an 84 percent duty on American goods, prompting the US to raise the stakes further. Although tensions remain high, the structure of Trump’s latest tariff maneuver—penalizing only China while easing pressure on others—has sparked speculation that the US may be attempting to isolate China diplomatically and force a return to the negotiating table.

Highlights:

• China faces heightened tariffs, but signals openness to dialogue

• Trade war escalates, but potential for de-escalation remains

• Market participants weigh risk against the possibility of renewed talks

Credit Markets Reflect Optimism, But Analysts Urge Caution

The positive sentiment in equity markets has spilled over into credit markets. A sovereign Chinese credit-default swap index narrowed by 7.5 basis points on Thursday, reflecting reduced perceived risk. Investment-grade dollar bonds issued by Chinese borrowers also saw spreads tighten by at least 7 basis points, while broader Asian bond markets recorded at least a 5 basis point narrowing.

However, not all analysts are convinced the rally is sustainable. UBS strategists, including James Wang, warned that risks from a worsening global macroeconomic environment and prolonged US-China tensions remain elevated. In a research note dated April 10, they cautioned that it may still be “too early to bottom fish” in Chinese equities, given the fluid geopolitical dynamics and uncertainties surrounding the scope and timing of any stimulus.

Highlights:

• Chinese credit markets tighten amid easing risk perceptions

• Analysts urge caution despite three-day equity rally

• Longer-term sustainability hinges on stimulus follow-through and trade resolution