Violence in Hong Kong pushes markets lower

Shares around the globe fell on Monday, buffeted by escalating violence in Hong Kong that pushed Asian stocks to their worst day since August and stoked demand for the safehaven yen and gold.

In the 24th straight week of prodemocracy unrest, Hong Kong police shot and wounded a protester as the Chinese-ruled territory saw rare working-hours violence.

The MSCI world equity index, which tracks shares in 47 countries, slipped 0.2%, with Hong Kong’s Hang Seng index falling 2.6% and leading losses across Asia. There, MSCI’s widest index of Asia-Pacific shares outside Japan fell 1.2% from sixmonth highs to set a course for its worst day since late August. Chinese blue chips dropped 1.8%. The nerves spread to Europe, too.

The broad Euro STOXX 600 fell 0.4%, with London shares losing 1.1%. Wall Street futures gauges also suffered, suggesting losses of around 0.4%. Some investors said markets could be affected by any further escalation of the violence in Hong Kong, where protesters are angry about what they see as police brutality and meddling by Beijing in the freedoms guaranteed to the former British colony.

Investors were also focused on the U.S-China trade talks. After a bout of optimism last week over prospects that Washington and Beijing could reach an initial deal to alleviate their 18-month old dispute, doubts gnawed at markets again.

On Saturday, U.S. President Donald Trump said talks had moved more slowly than he would have liked. He said reports that the United States was willing to lift tariffs were incorrect, adding that Beijing wanted a deal more than he did. Still, some market players said Trump’s comments fitted an established pattern of optimistic rhetoric being followed by a more sceptical tone. A deal was still likely, they said.

In Europe, Spanish government bond yields held their ground after a weekend election delivered a fractured parliament and set the stage for difficult talks to form a ruling coalition. The farright surged in the poll, the fourth in as many years.