Mainland China and Hong Kong stocks rose for the third straight session on Wednesday, with the Shanghai benchmark posting its highest close in nearly four years, as prospects of a Federal Reserve interest rate cut next month lifted investor sentiment.
** At the close, the Shanghai Composite index 000001 was up 0.48% at 3,683.46, the loftiest closing level since September 13, 2021.
** China’s blue-chip CSI300 index 3399300 climbed 0.79%. Meanwhile, A shares’ daily trading, combining both Shanghai and Shenzhen markets, hit 2.15 trillion yuan, the highest level since February 21.
** In Hong Kong, the benchmark Hang Seng Index 
HSI jumped 2.58%, while the Hang Seng tech index HHSTECH leapt 3.52%.
** Expectations have firmed for a Fed rate cut in September after the U.S. consumer inflation report indicated the pass-through from President Donald Trump’s sweeping tariffs to goods prices has so far been limited.
** With rising expectations of a Fed rate cut, risk appetite improved and “emerging and developed equity markets resonated,” analysts at Guoyuan Securities said in a note.
** The MSCI All Country World Index EURONEXT:IACWI hit an all-time high.
** Lifting market sentiment further, China said it will offer interest subsidies for businesses in eight consumer service sectors to support services consumption amid a slowing economy.
** “China retains the fiscal firepower to stimulate growth and absorb slack from reduced exports should tariffs from the U.S. be punitive,” said Vivek Bhutoria, portfolio manager for global emerging market equities at Federated Hermes.
** “We believe the market has been over-discounting risks in relation to Chinese equities, and even if Trump levies punitive tariffs this week, China has the ability to grow its way to prosperity and, as such, as we are still positive on China.”
** China’s A shares have been trending higher in recent weeks, as investors priced in positive signals from a series of U.S.-China trade talks.
** U.S. trade officials will meet again with their Chinese counterparts within the next two or three months to discuss the future of the economic relationship between the two countries, Treasury Secretary Scott Bessent said on Tuesday.
