Shanghai stocks jump 3.1% after a roller-coaster day

China's A-share markets rallied on Friday, with the three major index all posting strong performances and chip-makers leading the bounce. 

China’s A-share markets rallied on Friday, with the three major indexes all posting strong performances and chip-makers leading the bounce.

The benchmark Shanghai Composite Index jumped 3.1 percent or 88.26 points to finish at 2,939.21 points after a turbulent trading day.

The smaller Shenzhen Component Index gained 4.03 percent to end at 9,235.39 points, while the ChiNext Index advanced 4.38 percent to 1,533.87 points.

The combined turnover of the two bourses was 610.1 billion yuan (US$89.6 billion), up from the previous trading day’s volume of 434 billion yuan.

The market saw broad-based gains, with computer and communications names as well as non-banking financials leading the recovery. Shares of China GreatWall Technology Group Co Ltd soared by the daily 10 percent cap to 9.33 yuan a share.

Equities surged despite the US carries out its threat and raised tariffs on Chinese goods at midnight. Washington increased tariffs from 10 percent to 25 percent on US$200 billion worth of Chinese goods at 12:01am.

In response, China's Commerce Ministry said in a statement it "deeply regrets" that the US hiked tariffs and Beijing will have to take necessary countermeasures.

As the 11th round of Sino-US trade talks is still ongoing, China hopes that the United States can “meet it halfway” and that the two sides will make joint efforts to resolve existing problems through cooperation and consultation, according to the statement.

The tariff move exacerbates the uncertainty in the global trading environment, further raises tensions between the US and China, negatively affects global sentiment and adds to risk aversion, said Michael Taylor, managing director and chief credit officer for Asia Pacific at Moody’s Investors Service.

The higher tariffs could also lead globally to the re-pricing of risk assets, tighter financing conditions, and slower growth, he added.

Nomura’s global markets research team said that the escalation brings US-China trade negotiations into uncharted territory and substantial uncertainty remains around the next steps, including whether Friday's action will result in a temporary or a protracted disruption to US-China economic relations.

The US had postponed raising tariffs twice after the December summit between presidents Xi Jinping and Donald Trump.

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