At the midday break, the Shanghai Composite index was down 1% at 3,820.98 points, on track for its biggest single-day loss since Aug 27.

The blue-chip CSI300 index declined 0.9% after touching a fresh 3-1/2-year high in the previous session.

Declines were across the board, with the defence sector and military-related shares among the biggest laggards, falling 4.6% and 5.2%, respectively.

China’s largest military parade, hosted by President Xi Jinping to commemorate 80 years since the end of World War Two, concluded this morning.

The country’s latest military equipment, such as missiles, tanks and drones, was on display.

Markets have largely looked past a private-sector survey showing China’s services activity expanded at the quickest pace in 15 months in August.

The financial sector sub-index, the consumer staples sector and the real estate index all declined by roughly 1.3%.

“Investor sentiment has become increasingly divided following a two-month uptrend, and market volatility is expected to rise,” analysts at China Post Securities said, adding that this may prompt a reassessment of whether current macro conditions justify elevated valuations.

In Hong Kong, the Hang Seng China Enterprises Index fell 0.5%, while the Hang Seng Index was down 0.4%.

Against the declines, the materials-sector sub-index added 0.8% with gold miners leading gains after prices of the precious metal hit another record.