China, HK shares rally as Trump delays Iran grid strike; caution lingers

China and Hong Kong stocks rebounded on Tuesday after U.S. President Donald Trump postponed a threat to strike Iran's power grid, offering a brief lift to risk appetite even as investors stayed wary following Tehran's denial that any talks had taken place.

China's blue-chip CSI300 Index .CSI300 closed up 1.3%, while the Shanghai Composite Index .SSEC gained 1.8%. Hong Kong benchmark Hang Seng .HSI was up 2.8%.

Global markets regained some ground after Trump cited "productive" discussions with senior Iranian figures, though some gains were trimmed as Iran sent waves of missiles into Israel, dismissing Trump's talk of negotiations as "fake news".

Onshore equity performance has shown only a weak link to energy prices, and implied volatility on major A-share indexes is running below levels seen during the April 2025 flare-up in global trade tensions and beneath many overseas peers, said Lei Meng, China Equity Strategist at UBS. The brokerage said the recent "de-risking" phase may be nearing an end in the short term.

The selloff on Monday saw China and Hong Kong benchmarks drop more than 3%, their steepest declines since Trump's "Liberation Day" tariff shock last year, as the escalating Middle East conflict sparked a global rout.

The onshore .CSIEN and offshore .HSCIE energy indexes fell 1% and 2%, respectively, while non-ferrous metal .CSISNMIM shares rebounded, up 3.2%. Materials stocks .HSCIM in Hong Kong jumped more than 6%.

Defensive financial stocks .CSI300FS rose 1.5%, led gains onshore, with bank shares .CSI399986 up 2.1%.

Shares of WuXi AppTec 2359.HKjumped the most in eight months after the Chinese new-drug developer and manufacturer posted a higher annual profit.

Laopu Gold's 6181.HK shares surged 16%, buoyed by strong 2025 financial results and an upbeat outlook.

Tech majors listed in Hong Kong .HSTECH were up 1.3%.

-Reporting by Shanghai Newsroom; Editing by Sherry Jacob-Phillips and Rashmi Aich/Reuters