China Stocks Mixed on Middle East Jitters

The Shanghai Composite fell 0.3% to 3,981 on Thursday, while the Shenzhen Component rose 0.4% to 15,013, as investor sentiment remained cautious amid renewed escalation of tensions in the Middle East. The US military carried out strikes on multiple targets in Iran for a second consecutive day, following President Trump's accusation that Tehran was stalling an interim peace agreement while warning of further attacks if Iran failed to sign a deal. While China's strategic oil reserves and renewable capacity have mitigated the energy shock, sustained high energy costs could squeeze corporate profit margins and hurt household spending through rising consumer prices. On the corporate front, Eoptolink Technology tumbled 29% to a one-month low after the announcement of plans to seek a listing in Hong Kong. Zijin Mining (-2.1%), BYD (-0.6%), and Weichai Power (-3%) also fell. Meanwhile, energy stocks PetroChina (1.4%) and CNOOC (2.1%) rose on surging oil prices amid Middle East tensions.

The Shangai Composite Index decreased 17 points or 0.42 percent on Wednesday to close at 3993 points. The decline was led by Sanan Optoelectron (-10.00%), Shanghai Petrochemical (-5.71%) and Sany Heavy Industry (-5.32%). On the upside, the strongest performers were China Life Insurance (4.53%), New China Life (4.19%) and Great Wall Motor (3.38%).

The Shanghai Composite fell 0.42% to close at 3,993 on Wednesday, while the Shenzhen Component dropped 2.06% to 14,954, reversing the previous session’s gains as investors weighed the inflationary impact of surging global energy prices stemming from prolonged tensions in the Middle East. Annual producer prices climbed to 3.9% in May 2026 from 2.8% in the prior month. It marked the highest level since July 2022, as higher commodity and energy costs were amplified by supply disruptions linked to the war. Meanwhile, China’s annual consumer inflation rate remained elevated at 1.2% in May, although slightly below market expectations of 1.3%. While China has buffered part of the energy shock through strategic reserves and renewable capacity, persistent cost pressures could squeeze corporate margins and weigh on household consumption via higher prices. Among the biggest laggards were Foxconn Industrial Internet (-4.83%), CNOOC Limited (-2.83%), CATL (-2.75%), and Zhongji Innolight (-2.8%).