Mainland and Hong Kong stocks advanced on Friday, with the Shanghai benchmark snapping five straight weekly losses, underpinned by accelerating domestic inflation that signalled an end to entrenched industrial deflation.

The benchmark Hang Seng Index ended 141 points, or 0.55 percent, higher at 25,893.

The China enterprises index was 43 points, or 0.5 percent, up at 8,655 while the tech index was 38 points, or 0.8 percent, up at 4,860.

On the mainland, the Shanghai Composite Index closed up 20 points, or 0.51 percent, at 3,986.

For the week, the Shanghai benchmark gained 2.74 percent to book the first weekly rise in ⁠six while the CSI300 rose 4.41 percent to snap three straight weeks of declines.

The Shenzhen Component Index was 313 points, or 2.24 percent, higher at 14,309 while the ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, was 125 points, or 3.78 percent, up at 3,448.

The gains came despite China's factory-gate prices rising for the first time in more than three years in March, an early sign that the war in Iran is feeding cost pressures into the world's second-largest economy.

"The Middle East conflict put an unexpected but earlier end to China's industrial deflation in March, despite an overall mixed picture," Citi analysts said in a note.

"The easing of deflationary risk should give policymakers a temporary opportunity to advance the already-planned reform agenda," said Zhaopeng Xing, senior China strategist at ANZ.

"To mitigate the risk, the anti-involution push remains essential in the near ⁠term, in our view. Regulatory tightening will likely resume once the external headwinds subside," Xing said, noting that domestic demand remained weak.

Brokerage shares led the gains as the upbeat inflation data lifted market sentiment, with a sub-index tracking the industry leaping 3.6 percent.

Middle East tensions remained one of the biggest market focuses.

A fragile US-Iran ceasefire showed further strain on Friday, a day before they are to negotiate in Pakistan.

Washington accused Tehran of breaching promises on the Strait of Hormuz and Israel struck Lebanon with attacks that Iran has claimed violate the truce.

Car exports, an increasingly important source of growth for China's hyper-competitive auto sector, picked up pace in March despite shipment disruptions from the Middle East crisis.

Separately, market participants said they look to China's first-quarter gross domestic ⁠product and a string of activity indicators next week for more clues on economic health.

In Tokyo, the Nikkei share average surged on Friday to its steepest weekly advance in more than a year as optimism over corporate earnings and technology investment outweighed concerns about a fragile ceasefire in the Middle East.

The benchmark Nikkei 225 Index rose 1,028 points, or 1.84 percent, to close at 56,924, rising 7.1 percent in the past five sessions for its best week since August 2024.

Gains were concentrated around major companies, with the broader Topix slipping 0.04 percent to 3,739.

In Seoul, the benchmark Kospi closed up 80 points, or 1.4 percent, at 5,858, after rising more than two percent at one stage during the day, to bring its gains for the week to 8.96 percent.

That was its biggest weekly gain since January 2021 after two consecutive weekly declines. (Reuters/Xinhua)


Edited by Tony Sabine