By the midday break, the Shanghai Composite index was up 0.2% at 3,567.02 points, recovering from losses in the opening hour.

The blue-chip CSI300 index was barely changed.

The defence sector led the onshore market higher with a 2.2% gain.

The banking sector added 1% and semiconductors gained 0.4%.

The small gains today came after markets booked their steepest losses since April last week.

The bullish trend for Chinese equities has started to show signs of slowing as the much anticipated Politburo meeting and tariff negotiations with the US both failed to deliver positive surprises.

“Market sentiment is becoming more volatile as positive catalysts are losing momentum,” Citic Securities said in a note, adding that investors might shift focus to defensive sectors and those more insulated from external shocks.

In Hong Kong, the benchmark Hang Seng Index was up 0.5% at 24,627.25, also recovering from last week’s loss.

The tech sector jumped 0.9% and AI-related shares added 1%, leading markets higher.

Looking ahead, markets are awaiting new developments on the trade truce between China and the US that expires on Aug 12.

US treasury secretary Scott Bessent said on Friday that Washington has the makings of a deal and was “optimistic” about the path forward.

China’s trade data and CPI readings later this week will also give investors more clues about the health of the world’s second-largest economy.

“Given rising uncertainties in the foreign market, especially in the US where Trump’s intervention of economic reporting undermines the efficacy of policies, both on- and off-shore Chinese markets will likely be under pressure in the near term,” Hong Hao, CIO at Lotus Asset Management, said in a note.