China, Hong Kong stocks track regional peers lower on oil-driven inflation fears

Mainland China and Hong Kong's stock markets experienced declines on Thursday, as rising Middle East tensions renewed worries about higher oil prices and inflation. The Shanghai Composite index fell 0.4%, while the CSI300 index also dropped 0.4%. The Shenzhen index lost 0.7%, and the ChiNext Composite index decreased by 0.2%. Shanghai's tech-focused STAR50 index fell 0.4%.

In Hong Kong, the Hang Seng index declined 1.3%, and tech shares in the city slipped 2.1%. The escalating attacks on shipping in the Iran conflict kept oil prices above $100 a barrel, contributing to the market slide. Traders and analysts are closely monitoring U.S. inflation data, which is scheduled for release later in the week, as they seek insights into the Federal Reserve's policy stance and its potential effects on global financial markets.

OCBC Bank analysts noted that the decision by the September FOMC meeting remains uncertain due to the pending U.S. CPI release. The spread between the 10-year U.S. Treasury yield and its Chinese counterpart reached an all-time high, fueled by rising U.S. yields due to concerns that increased oil prices could spark inflation. Survey results indicated that U.S. companies operating in China were more optimistic about their business outlook, with confidence hitting a record low last year due to political tensions, intense domestic competition, and economic slowdown.

Meanwhile, Chinese artificial intelligence startup DeepSeek has engaged CITIC Securities to help prepare for its initial public offering on Shanghai's tech-focused STAR Market.