China, Hong Kong stocks rally as US-Iran ceasefire boosts sentiment

China and Hong Kong stocks jumped on Wednesday as a U.S. ceasefire deal with Iran lifted risk appetite.

China's blue-chip CSI300 Index .CSI300 advanced 2.8% by the lunch break, while the Shanghai Composite Index .SSEC gained 1.9%

Hong Kong benchmark Hang Seng .HSI jumped 2.8%. Hong Kong-listed tech giants .HSTECH surged 4.4%

The two-week ceasefire agreement has sparked a relief rally across major Asian stocks and currencies, thanks to the easing geopolitical tensions.

Gold .CSI931238 and semiconductors .CSI931865 sectors led the rally, up more than 6% each, while energy stocks .CSIEN dropped 2.8%.

In Hong Kong, index heavyweight Meituan 3690 soared 9.9% on easing regulatory risks. Semiconductors .HSSCSS and real estate companies .HSNP also outperformed.

Today's rally looks "broader than pure geopolitical relief trade," said Charu Chanana, chief investment strategist at Saxo, citing the jump in Hong Kong property stocks as a sign that investors are reacting to the improving demand.

The rally can stretch further near term, she added, especially if lower oil, yuan strength and improving Hong Kong property sentiment keep reinforcing each other.

On policy front, markets believe Chinese policymakers will maintain a wait-and-see approach unless external shocks to the economy increase significantly.

Some investors expect the rebound in China shares to be relatively mild, given they haven't experienced a meaningful selloff amid the Iran war.

"As a result, the scope for a rebound, if and when geopolitical risks ease, appears more limited," Yan Wang, chief EM and China Strategist at Alpine Macro, said in a note.

The smaller Shenzhen index .SZSC was up 3.45%, start-up board ChiNext Composite index .CNT was higher by 4.81% and Shanghai's tech-focused STAR50 index .STAR50 was up 5.05%​.

MSCI's Asia ex-Japan stock index .MIAPJ0000PUS firmed by 4.96%, while Nikkei index .N225 was up 5.27%.

-Summer Zhen/Reuters