China stocks near 3-week high as Sino-US trade truce sparks optimism

China stocks hit their highest levels in nearly three weeks on Wednesday, lifted by optimism over progress in U.S.-China trade talks, though investors awaited further details on the framework agreed by the two countries.

China’s blue-chip CSI300 Index rose as much as 1.2%, hitting its highest level since May 23. The Hong Kong’s benchmark Hang Seng index climbed up to 1%, reaching its strongest level since March 20.

U.S. and Chinese officials said on Tuesday they had agreed on a framework to put their trade truce back on track and remove China’s export restrictions on rare-earths while offering little sign of a durable resolution to longstanding trade differences.

“This is positive news to the market. At least now there’s a bottomline that neither side is willing to cross,” said Mark Dong, co-founder of Minority Asset Management.

“Going forward, both sides will move toward reducing the trade imbalance.”

The two-day meeting in London followed a rare leader-to-leader call between U.S. President Donald Trump and Chinese counterpart Xi Jinping on Thursday, after tensions between the countries flared with each accusing the other of violating the Geneva deal. The CSI Rare Earth Index jumped nearly 4% and shares of China’s semiconductor index edged up 0.2%. “The details matter, especially around the degree of rare-earths bound for the U.S., and the subsequent freedom for U.S. produced chips to head East,” said Chris Weston, head of research at Pepperstone.

“But for now as long as the headlines of talks between the two parties remain constructive, risk assets should remain supported.”

By the lunch break, the CSI 300 Index had risen nearly 1%, the Shanghai Composite Index gained 0.5% and the Hang Seng Index was up close to 1%.

Tech majors traded in Hong Kong gained 1.2%.

Chinese stocks have struggled for direction since April 2, when Trump announced sweeping reciprocal tariffs that threatened to upend the global trade order.

The CSI300 Index has barely budged from the April 2 level, and Hong Kong’s benchmark Hang Seng Index gained around 5% during the period, both lagging the recovery among major global markets.

China’s auto stocks rose 2.2% on Wednesday, after several major automakers – including BYD, Chery and Geely – pledged to pay suppliers within 60 days.