BANGKOK (AP) – Shares fell yesterday in Europe and Asia as investors awaited a news conference about China by United States (US) President Donald Trump later in the day.
Benchmarks slipped in Paris, Frankfurt and Tokyo but rose in Shanghai.
US and Chinese officials have been trading harsh rhetoric recently on everything from Hong Kong to the response to the coronavirus outbreak. One fear is that further friction could lead to another punishing round of escalating tariffs between the two countries that would hit the global economy when it’s already in a severe recession due to the coronavirus pandemic.
“The world awaits Trump’s news conference tonight and the market is reacting, although there is absolutely no panic at all and it’s about pre-positioning,” Chris Weston of Pepperstone said in a commentary.
China’s National People’s Congress on Thursday approved a national security law aimed at suppressing secessionist and subversive activity in Hong Kong, overriding any potential opposition by local lawmakers.
US Secretary of State Mike Pompeo has said the law means Washington may no longer treat the former British colony, already reeling from anti-government protests and the pandemic, as autonomous from Beijing. That could undermine the city’s status as a major center for trade and finance.
Germany’s DAX lost 1.4 per cent to 11,616.15 and the CAC 40 in France slipped 1.2 per cent to 4,712.27. Britain’s FTSE 100 gave up 1.1 per cent to 6,149.44. US markets were poised for losses, with the future contract for the S&P 500 0.6 per cent lower and the future for the Dow industrials down 0.7 per cent.
Weak economic data from Japan also cast a pall, as the government reported that industrial production fell more than nine per cent in April from the month before, while retail sales dropped nearly 10 per cent, month-on-month. That was the biggest fall since a sales tax hike in 1997.
Hong Kong’s Hang Seng index dropped 0.7 per cent to 22,961.47, while Japan’s Nikkei 225 index fell 0.2 per cent to 21,877.89. Australia’s S&P/ASX 200 skidded 1.6 per cent to 5,755.70.
The Kospi in South Korea added 0.1 per cent to 2,029.60, while the Shanghai edged 0.2 per cent higher to 2,852.35.
Overnight, the S&P 500 ended the day 0.2 per cent lower at 3,029.73. The Dow Jones Industrial Average lost 0.6 per cent to 25,400.64 and the Nasdaq composite fell 0.5 per cent, to 9,368.99.
Even with Thursday’s loss, the S&P 500 is still on pace for its third weekly gain of at least 2.5 per cent in the last four weeks. Following their breathtaking drop of nearly 34 per cent in February and much of March, stocks began recovering after the Federal Reserve and Capitol Hill pledged unprecedented amounts of aid for the economy.
More recently, the market has pushed higher as investors move into stocks that would benefit most from a reopening economy. Governments around the country and around the world are slowly lifting restrictions meant to corral the outbreak, which has investors hoping the worst of the recession has already passed, or will soon.