China’s stocks mixed, Hong Kong slips as Hormuz reopening hopes fade

On Tuesday, mainland Chinese stocks demonstrated a mixed performance while Hong Kong shares experienced a slight decline. Investors appeared to be reevaluating the situation as the potential end to the US-Iran conflict, which had previously driven up global oil prices, became less likely.

The Shanghai Composite index saw a slight drop of 0.1%, while the blue-chip CSI300 index saw a modest gain of 0.2% by midday. The Shenzhen index increased by 0.4%, and the ChiNext Composite index rose by 1.4%. Shanghai's tech-focused STAR50 index also showed a small uptick of 0.2%.

Meanwhile, US President Donald Trump had responded to Iran's conditions for a peace deal with his own demands, including compensation for those killed in wars, attacks, and protests. This rhetorical escalation heightened tensions and complicated efforts to reopen the Strait of Hormuz. Oil prices remained stable on Tuesday, hovering near a week-long high, as hopes for a resolution between the US and Iran waned.

In China, non-ferrous metal stocks led the decline in early trading, with a sub-index tracking the sector falling 1.5%. Meanwhile, Unitree, a Chinese robot maker, announced its US$900 million Shanghai initial public offering, which was more than 8,000 times oversubscribed by retail investors. This surge in investor interest reflected the enthusiasm surrounding the IPO.

Hong Kong's benchmark Hang Seng index fell by 0.6%, and the city's tech shares declined by 1.3%. Investors were awaiting updates on US inflation data, which would provide additional insights into how the Iran conflict had contributed to price pressures. This information could influence the Federal Reserve's policy outlook, particularly after last week's weak employment report dampened expectations for an immediate rate hike.