China stocks track global peers higher as investors

China stocks closed up on Wednesday and tracked global peers higher as market sentiment was buoyed by upbeat earnings from U.S. companies and rate-cut relief after data showed U.S. business activity cooled in April.

Lifting sentiment, UBS analysts forecast foreign investors to gradually return to China’s market via the Stock Connect as market sentiment and the macro environment improve. The bank’s strategists upgraded MSCI China equities to “overweight” on Tuesday.

Asian stocks tracked Wall Street higher as an afterhours surge in U.S.-listed shares of electric vehicle maker Tesla and upbeat earnings from some U.S. companies lifted risk sentiment.

Traders also found comfort in data that signalled U.S. business activity cooled in April to a four-month low due to weaker demand, while rates of inflation eased slightly, suggesting some possible relief for the Federal Reserve.

At the close, the Shanghai Composite index was up 0.76% at 3,044.82. China stocks dragged down by cyclical shares.

The blue-chip CSI300 index was up 0.44%, with its financial sector sub-index higher by 0.15%, the consumer staples sector up 0.11%, the real estate index down 0.3% and the healthcare sub-index down 0.75%.

The smaller Shenzhen index ended up 1.18% and the start-up board ChiNext Composite index was higher by 0.699%. The Hang Seng index closed up 372.34 points or 2.21% at 17,201.27. The Hang Seng China Enterprises index rose 2.45% to 6,100.22.

The sub-index of the Hang Seng tracking energy shares rose 0.7%, while the IT sector rose 3.97%, the financial sector ended 1.68% higher and the property sector rose 1.81%.

Chinese artificial intelligence (AI) software developer SenseTime Group Inc were halted from trading, after soaring as much as 36.1%, their biggest one-day gain since January 2022. Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.69%, while Japan’s Nikkei index closed up 2.42%. China stocks closed down on

Tuesday, dragged lower by cyclical shares such as metals, while technology companies boosted Hong Kong shares.

Non-ferrous metals companies led the declines in China, slumping 4.5%, while coal-related stocks dropped 2.4%. Tech shares led gains in Hong Kong, with delivery giant Meituan and e-commerce giant JD.com up 8.0% and 6.1%, respectively.

UBS strategists upgraded MSCI China equities to “overweight” as the index has a higher weight in consumption, where they see early signs of improvement, and has been little affected by the weak property sector.

At the close, the Shanghai Composite index was down 0.74% at 3,021.98.

The blue-chip CSI300 index was down 0.7%, with its financial sector sub-index lower by 0.09%, the consumer staples sector up 0.96%, the real estate index down 1.07% and the healthcare sub-index up 1.23%.

The smaller Shenzhen index ended down 0.19% and the start-up board ChiNext Composite index was higher by 0.154%. HK shares jump on policy support; China slips

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.84%, while Japan’s Nikkei index closed up 0.3%. At 0831 GMT, the yuan was quoted at 7.2468 per U.S. dollar, 0.04% weaker than the previous close of 7.244.

At the close of trade, the Hang Seng index was up 317.24 points or 1.92% at 16,828.93. The Hang Seng China Enterprises index rose 2.12% to 5,954.62.

The sub-index of the Hang Seng tracking energy shares rose 0.3%, while the IT sector rose 3.81%, the financial sector ended 1.4% higher and the property sector rose 1.89%.

Denting investor appetite for riskier assets, the dollar hovered near a five-month high alongside US Treasury yields in the wake of hotter-than-expected March consumer price data. Meanwhile, data on Thursday showed US producer prices increased only moderately.

China’s March exports contracted sharply while imports unexpectedly shrank, undershooting market forecasts by big margins, customs data showed on Friday, highlighting the stiff task facing policymakers as they try to bolster a shaky economic recovery.