China's Inflation Eased In May; PBoC Reiterated Accommodative Stance

Li Chen
09 Jul, 2026
Hong Kong

China's indexes lacked direction on Thursday, and investors welcomed the central bank's reassurance of keeping monetary policy appropriately loose. 

The Hang Seng Index decreased 0.7%, the mainland-focused CSI 300 Index edged up 0.1%, and the 10-year government bond yield fell to a one-week low of 1.73% as investors reacted to the PBoC's willingness to provide liquidity.

The PBoC said it is willing to supply additional liquidity to support demand while acknowledging the imbalance between strong supply and weak demand.

China's annual consumer inflation eased 1.0% in June from 1.2% in May, marking the softest increase in three months, according to the National Bureau of Statistics.

Food prices fell for the third consecutive month but decreased at a slower annual pace of 1.6% from 1.7% in May. 

Core inflation, which excludes food and energy prices, slowed to 1.0% from a 1.1% rise in May, confirming a weak demand growth outlook. 

In overnight trading, market averages in New York retained a downward bias amid concerns that the elevated level of AI infrastructure investment is not sustainable. 

Brent crude oil prices edged up 1.3% to $78.83 a barrel after tensions in the Middle East escalated, and the U.S. struck as many as 90 targets in Iran. 

Iran resumed its aerial strikes targeting the U.S. military bases in Kuwait, Bahrain, and Qatar in the Gulf and stepped up precision strikes on commercial ships in the Strait of Hormuz.

 

China Indexes and Stocks 

The Hang Seng Index decreased 0.7% to 24,020.61, and the mainland-focused CSI 300 Index edged up 0.1% to 4,758.39. 

Technology stocks led gainers in Shanghai, Shenzhen, and Hong Kong on Thursday. 

Eoptolink Technology gained 3%, Zhongji Innolight added 3.3%, and NAURA Technology increased 2.7%. 

Energy companies advanced following a 1% rebound in crude oil prices. 

CNOOC gained 1.2%, and PetroChina increased 1.1%.