Chinese stocks brush aside escalating trade war to post daily gains

China's stocks continued to strengthen on Thursday despite the escalating trade dispute between the United States and China.

The Shanghai Composite Index rose 1.16 percent, while the Shenzhen Component Index jumped 2.25 percent. Hong Kong's Hang Seng Index also advanced 2.06 percent.

The Beijing Stock Exchange 50 Index, which includes mainly small-cap tech stocks, surged 4.86 percent, indicating a broad-based increase of shares on mainland bourses, where 4,768 stocks reported gains and only 382 retreated.

The strong performance came against the backdrop of a surge on Wall Street overnight after US President Trump announced a 90-day pause on certain "reciprocal" tariffs for most countries.

The glaring exception was China, where he raised tariffs to 125 percent from 104 percent, after Beijing imposed an additional 50 percent tariff on US goods, bringing the total to 84 percent.

"Steep changes are now counted by days and even hours," said Huang Jianbin, chief assets management officer of Bosera Funds. "Chinese assets are expected to become a harbor for investors, given the government's firm attitude, supportive corporate sentiment and the market size."

Eric Zheng, president of American Chamber of Commerce in Shanghai, echoed mainstream economic opinion when he told a recent forum that tariffs are not the best way to resolve trade disputes, noting that ultimately "consumers pay the price."

China's Consumer Price Index, the main gauge of inflation, dipped 0.1 percent in March from a year earlier, narrowing from a drop of 0.7 percent in February, the National Bureau of Statistics said on Thursday.

The Producer Price Index, which measures factory-gate inflation, fell 2.5 percent in March, widening from a 2.3 percent decline a month earlier.

Elsewhere in Asia, Japan's Nikkei surged more than 9 percent, while shares in South Korea, Singapore and Australia also gained, bolstered by strong gains on Wall Street.

At the close of trading in Shanghai on Thursday, US stock futures, oil prices and US Treasury bond yields were down, with gold rising.

S&P 500 futures were off 0.66 percent. Benchmark Brent crude was trading at about US$65.08 a barrel. Gold futures were at US$3,136 an ounce.

Most eyes on Wall Street this week have been fixed on the bond market, where spiking yields led to fears of a market meltdown in the making, which likely contributed to Trump's decision to pause some tariffs.

A healthy bond market is critical to US government borrowing. The yield on the 10-year Treasury bond fell after the announcement. It stood at 4.318 percent when Shanghai closed.