Global stocks mixed on unease over Hong Kong security law

AP – Global stock markets were mixed yesterday as United States (US)-Chinese tensions over Hong Kong vied with optimism about recovering from the coronavirus pandemic.

Benchmarks in Shanghai and Hong Kong retreated after the White House said a proposed national security law might jeopardise the Chinese territory’s status as a global financial centre.

“Mounting US-China tensions bodes ominously for the global economy amid pandemic fragilities,” Mizuho Bank said in a report.

London and Frankfurt opened higher, while Tokyo also advanced.

The FTSE 100 in London rose 0.9 per cent to 6,123.50 and Frankfurt’s DAX added one per cent to 11,617.13. The CAC 40 in France gained 1.1 per cent to 4,656.90.

A currency trader walks at the foreign exchange dealing room in Seoul, South Korea. PHOTO: AP

On Wall Street, the future for the benchmark S&P 500 Index was 0.9 per cent higher and that for Dow Jones Industrial Average climbed one per cent.

On Tuesday, Wall Street closed at its highest level in nearly three months on hopes the global economy might be recovering from its deepest slump since the 1930s as more countries reopen factories, shops and other businesses.

In Asia, Hong Kong’s Hang Seng lost 0.4 per cent to 23,301.36 after falling as much as 0.7 per cent earlier in the day. The Shanghai Composite Index declined 0.3 per cent to 2,836.80.

The law under consideration for Hong Kong by the Chinese legislature has prompted warnings it might erode the independence of courts and other elements that help to make the former British colony a business centre.

The legislation would alter Hong Kong’s Basic Law, or mini-constitution, to allow Beijing to compel its government to enact laws. That would circumvent a local legislature that withdrew a proposed security law in 2003 following public protests.

Hong Kong’s leader tried on Tuesday to reassure businesses and the public the law wouldn’t threaten civil liberties. Details haven’t been released, but the decision to enact the law reflects the determination of President Xi Jinping’s government to tighten control over Hong Kong following anti-government protests.

US President Donald Trump said he was working on a response but declined to give details.

Trump is “displeased with China’s efforts and that it’s hard to see how Hong Kong can remain a financial hub if China takes over,” said White House press secretary Kayleigh McEnany. She declined to elaborate.

Friction has already mounted over the pandemic, which originated in China, and over whether Beijing is delivering on pledges to boost imports from the US as part of a trade deal with Washington.

Elsewhere in Asia, the Nikkei 225 in Tokyo recovered from early losses to gain 0.7 per cent, closing at 21,419.23. The Kospi in Seoul edged less than 0.1 per cent higher to 2,031.20 and Australia’s S&P-ASX 200 was off less than 0.1 per cent at 5,775.00.

India’s Sensex rose 2.8 per cent to 31,455.60 and New Zealand gained 1.2 per cent. Singapore declined while Bangkok and Jakarta advanced.

On Wall Street, the S&P 500 rose 1.2 per cent on Tuesday. It is 12 per cent below its all-time high in February.

The Dow Jones Industrial Average climbed 2.2 per cent and the Nasdaq composite rose 0.2
per cent.

Financial and industrial stocks accounted for much of the market’s gains. Companies that rely on consumer spending also rose broadly. Airlines were big winners as traders welcomed data showing a pickup in air travel during the long holiday weekend.

Fears of a crushing recession due to the coronavirus sent the S&P 500 into a skid of more than 30 per cent in March. Hopes for a relatively quick rebound and unprecedented moves by the Federal Reserve and Congress to stem the economic pain drove a historic rebound for stocks in April and have bolstered optimism that the market won’t return to the depths seen two months ago.

Fresh optimism about the development of potential vaccines for COVID-19 has also helped lift stocks. Investors are focussed on the process of reopening the US economy, which is likely to accelerate over the summer.

In energy markets, benchmark US crude lost 40 cents to USD33.95 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose USD1.10 on Tuesday to settle at USD34.35. Brent crude, used to price international oils, declined 54 cents to USD36.20 per barrel in London. It rose 64 cents the previous session to USD36.17.

The dollar gained to JPY107.58 from Tuesday’s 107.54. The euro retreated to USD1.0966 from USD1.0993.