Global Market: China stocks rebound, but weekly loss looms as AI rally cools

China stocks rose on Friday, but major mainland benchmarks remained on track to end the week lower as momentum in artificial intelligence shares faded and concerns over elevated U.S. Treasury yields weighed on global risk sentiment.

The blue-chip CSI300 Index and the Shanghai Composite Index were both up 0.4% by the midday break. In Hong Kong, the Hang Seng Index advanced 2.1%.

Despite Friday’s gains, the CSI300 was set to finish the week nearly 1% lower. The Hang Seng, meanwhile, was on course for a weekly gain of around 0.6%.


Read more: Global Market: South Korean shares rise on chip gains, KOSPI set for third weekly loss

Investors shift towards traditional sectors

Consumer staples led gains in mainland markets, climbing 2.6%, as investors rotated away from AI supply-chain stocks and towards more traditional sectors. Shares of Chinese liquor giant Kweichow Moutai rose 2.4%.

The technology-focused STAR50 Index fell 0.7% and was down nearly 4% for the week, while the CSI Artificial Intelligence Index edged 0.2% lower.

According to Reuters, sentiment in China's onshore A-share market remained subdued during the week amid concerns about higher U.S. yields and weak domestic economic data.

Morgan Stanley analysts also lowered their targets for Chinese equity indexes, citing a weaker growth outlook, tighter liquidity conditions, less favourable fund-flow dynamics and rising regulatory uncertainty.

Hong Kong tech stocks rebound

Hong Kong equities gained as investors responded positively to comments from Christopher Waller, who indicated that he was inclined to keep interest rates unchanged at the U.S. central bank's September meeting if upcoming inflation data continued to show easing price pressures.

The comments helped lift technology stocks in Hong Kong, with major tech companies rebounding from a two-month low. The sector rose 2.5%, while Alibaba gained 3.4%.

Xiaomi shares climbed 3.1% after the Chinese smartphone and electric vehicle maker announced a deal involving German auto dealers.

The broader market remains sensitive to developments in U.S. monetary policy, with movements in Treasury yields influencing investor appetite for riskier assets globally. For Chinese equities, investors are also closely watching domestic economic data and policy signals for evidence of a stronger recovery.

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