China and Hong Kong stocks fell on Monday as anxiety over U.S. trade policy intensified ahead of the July 9 deadline, with upcoming inflation data expected to further test investor nerves.

** As of the midday trading break, China’s blue-chip CSI300 Index 3399300 slipped 0.6%, while the Shanghai Composite Index 000001 edged down 0.2%.

** In Hong Kong, the benchmark Hang Seng HSI was down 0.5% and the Hang Seng China Enterprises Index (.HECE) weakened 0.4%.

** Although China is not at risk of being slammed by imminent higher tariffs, thanks to the trade truce with the U.S., sentiment was still largely subdued as the tariff deadline looms.

** The U.S. is now close to finalizing several trade agreements in the coming days and will notify other countries of higher tariff rates by July 9, U.S. President Donald Trump said on Sunday, with the higher rates set to take effect on August 1.

** “Markets are set to see more volatility from here,” and it’s unlikely to see a sustained uptrend with the expiring tariff deadline and trade policy uncertainties impacting risk appetite, analysts at Huatai Securities said in a note.

** Leading the onshore markets’ losses on Monday, the AI sector 9930713 declined 1.2% and the rare earth sector 9930598 lost 0.4% with trade tensions looming.

** The medical services sector (.CSI399989) weakened 0.8% after China’s finance ministry said on Sunday it was restricting government purchases of medical devices from the European Union in retaliation.

** Helping offset the losses, Chinese property developers listed in mainland and Hong Kong 000952, HHSMPI climbed by 1.4% and 0.8%, respectively, after the housing regulator vowed to put a floor on dropping home prices.

** Traders are also watching for China’s key inflation data on Wednesday to gauge the health of the world’s second-largest economy in the face of persistent deflation pressure and trade risks.