Rally in Chinese Stocks as Yuan Strengthens Post US-China Trade Deal

Chinese stocks experienced a significant rally today (May 12, 2025), with the yuan also strengthening following a joint announcement from the U.S. and China that they had reached an agreement to suspend part of the retaliatory tariffs, marking a major de-escalation of what could have been a disastrous trade war. Speaking after talks with Chinese officials in Geneva, U.S. Treasury Secretary Scot Benson told reporters that both sides had agreed on a 90-day pause in measures and that mutual tariffs would be reduced by 115%. The Hang Seng Index of Hong Kong extended its gains to over 3% after the announcement but closed at +2.98% at 23,549.46 points, while the Hang Seng Tech Index surged by 5.96%. The Shanghai Index closed up at +0.82%. Meanwhile, the blue-chip CSI 300 Index of mainland China rose by 1.16%, closing at 3,890.60 points. The yuan strengthened to 7.2001 against the dollar, hitting a six-month high, and recorded an increase of over 0.5% in offshore trading. The Japanese benchmark Nikkei 225 closed 0.38% higher at 37,644.26 points, while the broader Topix added 0.31% to reach 2,742.08 points. ‘The outcome far exceeds market expectations. Previously, the hope was simply that both sides could sit down and talk, and the market was very fragile,’ said William Sin, president of Spring Mountain Pu Jiang Investment Management in Shanghai. ‘Now there is greater certainty. Chinese stocks and the yuan will likely be on an upward trajectory for some time.’