SHANGHAI: Chinese stocks recorded their biggest single-day drop in six months, demonstrating the fragility of investor sentiment despite ongoing stimulus efforts. Hong Kong shares were also down.

China’s blue-chip CSI300 index closed down 2.1%, its largest one-day decline since mid-January, after snapping a 7-session winning streak on Monday.

Liquor and consumer-related shares slumped on Tuesday, dragging on the broader market, as consumer sentiment remained frail after a key leadership gathering last week.

China surprised markets on Monday by lowering a string of major short- and long-term interest rates, in an effort to boost growth in the world’s second-largest economy.

The surprise monetary easing won’t move the needle on growth but it sends a strong signal that authorities are going to “actively expand domestic demand” as stated in China’s third plenum by exhausting all policy means, said analysts at TD Securities.

Investors are taking a defensive stance, continuing to rotate into the banking sector, UBS analysts said in a note on Tuesday.

The CSI banks index was one of the few bright spots, up 0.9%. Liquor shares dropped 4.3%, while chip stocks were down 4.9%. At the close, the Shanghai Composite index was down 1.65% at 2,915.37.

The CSI’s financial sector sub-index slipped 0.36%, the consumer staples sector fell 3.29%, the real estate index was down 2.35% and the healthcare sub-index dropped 3.12%.

The smaller Shenzhen index ended down 2.58% and the start-up board ChiNext Composite index was weaker by 3.044%.

At 0726 GMT, the yuan was quoted at 7.2746 per US dollar, 0.01% weaker than the previous close of 7.2736.

At the close of trade, the Hang Seng index was down 166.52 points or 0.94% at 17,469.36. The Hang Seng China Enterprises index fell 0.95% to 6,194.69.