Shanghai stocks declined on June 1, 2026, as investors reacted to disappointing manufacturing data and continued selling pressure in technology stocks. According to reports from Business Standard, the market weakness was driven by mixed signals from key economic indicators and profit-taking activities in the technology sector. However, recent developments show the market facing additional pressure from escalating trade tensions.
The latest decline follows significant trade policy developments that have intensified market concerns. The US Trade Representative proposed new tariffs of up to 12.5% on imports from 60 countries, including China, set to take effect next month. As reported by Business Standard, these tariffs are linked to concerns over forced labor in supply chains, creating immediate market anxiety. Additionally, the EU announced the Industrial Accelerator Act and the Cybersecurity Act, measures that could restrict Chinese companies access to parts of the European market. Beijing has warned of retaliation, fueling fears of a broader trade dispute that could impact Chinese companies across multiple markets.
Official figures revealed the Composite PMI increased to 50.5 in May from 50.1 in April, supported by a rebound in the non-manufacturing sector which rose to 50.1 from 49.4. However, manufacturing PMI showed weakness, slipping to 50.0 from 50.3 in the previous month. A private survey also confirmed the manufacturing slowdown, with the manufacturing PMI easing to 51.8 from April's five-year high of 52.2, as reported by Business Standard.
Technology stocks emerged as the primary drag on both indices, with significant profit-taking activities across major players. Notable decliners included Cambricon Technologies (-1.47%), SMIC (-3.19%), Zhongji Innolight (-2.21%), Eoptolink Technology (-4.18%), and NAURA Technology (-3.89%). According to Business Standard, this broad-based selling in the technology sector contributed significantly to the overall market decline. Recent trading shows continued pressure with CATL dropping 4.27%, BYD slipping 1.46%, and Suzhou TFC Optical Communication falling 3.4%.
Despite broad market weakness, some individual stocks showed resilience. GigaDevice Semiconductor surged 7.53% after FTSE Russell confirmed its inclusion in the China index series, providing a bright spot for the technology sector. However, the overall market sentiment remains cautious as investors navigate the combination of domestic economic data concerns and escalating international trade tensions that could impact Chinese companies across multiple sectors.
