Chinese stocks fall as geopolitical tensions weigh on sentiment

China?s stock markets slipped on Thursday, giving back some of the previous day?s gains as investors grew cautious about rising global tensions. The Shanghai Composite fell 0.7% to 3,966, while the Shenzhen Component dropped 0.3% to 13,996.

Markets turned nervous after fresh uncertainty around the US?Iran situation. Israel carried out major strikes on Lebanon, and Iran signaled it may not move forward with talks on a long-term agreement, raising concerns about the stability of the ceasefire.

Consumer staples and financial stocks led the losses, both falling about 1.4%. Shares of Foxconn Industrial, Zijin Mining, and BYD also declined noticeably. On the other hand, energy stocks saw small gains as oil prices moved higher.

Investors are now looking ahead to China?s first-quarter inflation data due on Friday, which could provide more insight into the strength of domestic demand. There are expectations that China may come out of deflation sooner than previously thought, with key indicators like producer prices, consumer prices, and the GDP deflator likely turning positive.