Wall Street, Europe insipid after Hong Kong sell-off
Wall Street and European markets turned in an insipid performance after heavy losses for Hong Kong over China’s push for a national security law.
LONDON: Wall Street and European markets turned in an insipid performance after heavy losses for Hong Kong over China’s push for a national security law.
“The FTSE 100 is underperforming against its Continental counterparts as USChina tensions rise,” was the verdict of David Madden at CMC markets after London gave up 0.37 per cent on the day.
Wall Street was off 0.5 per cent mid session as Germany’s DAX and the French CAC40 ended virtually unchanged.
Madden warned that “equity traders are a little nervous” as they mull the extent to which the Hong Kong issue, which has overshadowed the easing of coronavirus lockdowns in Europe and the United States, could further exacerbate Sino-US relations.
After months of concentrating on the economic impact of the coronavirus, traders’ attention is once again also on China-US tensions, already exacerbated by US President Donald Trump’s constant criticism of Beijing’s handling of the pandemic.
On the first day of its rubberstamp parliament’s congress, China unveiled proposals to strengthen “enforcement mechanisms” in Hong Kong, after the city was last year rocked by seven months of massive – and sometimes violent – prodemocracy protests.
There was criticism from Washington regarding the latest move, with the State Department saying it would be “highly destabilising, and would be met with strong condemnation from the US and the international community”.
Hong Kong’s main stocks index closed down more than five per cent, with financials and property firms battered as investors fretted about the city’s economic future.
“Riots in the street and plummeting real estate markets might be the least of Hong Kong’s building wall of worry as this authoritarian national security plan will most certainly bring into question (the city’s) status as a global banking centre,” said Stephen Innes of AxiCorp.
US lawmakers have already passed legislation that would strip the city’s preferential trading status in the US if it no longer enjoys autonomy from the mainland.
“The very real threat now is the return of mass protests to the streets of Hong Kong, a downgrade in trade status with the US and potentially an exit of large companies,” said Oanda analyst Jeffrey Halley.
After Chinese officials refrained from offering a 2020 growth target in light of the coronavirus, Wall Street had sagged from the outset, with the Dow Jones losing 0.4 per cent five minutes into the session.