On Friday, China and Hong Kong stocks edged up, marking their second consecutive week of gains. This positive turn comes as both the U.S. and China seem to be softening their stances on a potential trade war, providing much-needed relief for investors.

Market Performance Highlights

China’s blue-chip CSI300 index rose by less than 0.1% by the close of the day, while the Shanghai Composite index remained largely unchanged. Meanwhile, the Hang Seng Index in Hong Kong recorded a 0.3% increase.

This upward trend signifies a total gain of 2.7% for the holiday-shortened week, marking the best performance seen in nearly two months.

Recent Index Trends

All three major indexes have now notched consecutive weeks of growth, standing near their highest levels since April 3, when U.S. President Donald Trump announced “reciprocal tariffs” on imports, which initially spurred a global market rout.

U.S. Trade Tariffs and China’s Exemptions

In a strategic move to cushion the economic fallout from these tariffs, Beijing has reportedly granted some exemptions on U.S. imports facing crippling 125% tariffs, according to a Friday report from Reuters.

Shifts in U.S. Policy

The improved market sentiment follows a notable shift in tone from the White House this week, with indications that easing tensions with China might be on the table. President Trump announced on Thursday that trade talks between the two nations were actively taking place.

Support from China’s Politburo

Adding to the positive outlook, the Politburo of China’s Communist Party declared on Friday its commitment to support firms and workers affected by the U.S. tariffs. They also mentioned intentions to ease monetary policy to maintain stability within the domestic market.

Market Caution Persists

Despite these positive developments, markets are expected to act cautiously and remain in a wait-and-see mode, according to Eugene Hsiao, head of China equity strategy at Macquarie Capital, Hong Kong. The recent volatility continues to loom over investor sentiment.

Tech Sector Boosts Market Performance

Friday’s trading sessions saw technology shares contributing significantly to the positive momentum in both onshore and offshore markets. The CSI Artificial Intelligence Index experienced a 1% gain while the chip sector sub-index rebounded, climbing 0.2% after earlier losses.

Hang Seng Tech Index Trends

The Hang Seng Tech Index slightly eased earlier gains, up by 0.1% in Hong Kong, while AI-related sub-indices added 0.3%.

Investment Strategies Adapting to Market Conditions

Eli Lee, chief investment strategist at Bank of Singapore, has stated, “We are adopting a barbell approach that favors technology and consumer staples. We particularly focus on companies with strong pricing power and business models that are relatively shielded from tariff-related challenges.”

Conclusion

As both the U.S. and China show promising signs of easing trade tensions, markets in China and Hong Kong reacted positively. However, the cautious atmosphere implies that investors should remain vigilant as developments continue to unfold.