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Stock markets retreat as Trump triggers Chinese anger
LONDON, Nov 29, 2019 (BSS/AFP) – Stock markets eased lower Thursday as
China-US trade talks were jolted by legislation in Washington backing Hong
Kong protests that has angered Beijing.
US President Donald Trump signed into law a bi-partisan bill that voiced
support for the pro-democracy protests, prompting a sharp response from
Chinese officials.
That tempered enthusiasm for equities that have been on a roll — with
Wall Street hitting multiple records — owing to expectations that the
closely followed trade negotiations would lead to a partial pact soon.
“European stock markets are in the red today as US-China trade tensions
have ticked up a little on the back of President Trump signing the Hong Kong
bill,” noted David Madden, analyst at CMC Markets UK.
“This is a new dimension to the US-China relationship, and it has the
potential to derail the trade talks. Traders are fearful that China will
lash-out at the US, which is why stocks are lower,” he said.
European Central Bank data that showed growth in lending to eurozone
businesses and households in October, and a stronger economic sentiment
indicator for the single currency zone failed to lift the mood.
The dollar was mixed against other major currencies meanwhile, while oil
prices were lower.
In New York, the stock markets were closed for Thanksgiving Day.
On Wednesday, Trump put his name to the Hong Kong Human Rights and
Democracy Act, which requires the president to annually review the Chinese
city’s favourable trade status and threatens to revoke it if democratic
freedoms there are quashed.
Trump also agreed to legislation banning sales of tear gas, rubber bullets
and other equipment used by Hong Kong security forces to put down protests
that have wracked the city since June, battering its economy.
The president expressed “respect” for Chinese counterpart Xi Jinping and
said he hoped all sides could “amicably settle their differences”.
Trump had seemed reluctant to sign the bill with the trade talks still
ongoing, but with almost unanimous US congressional support for the measure,
he had little political room to manoeuvre.
China hit out at the “extremely abominable” decision and threatened “firm
countermeasures” that were not specified, while summoning the US ambassador
to lodge a protest.
The law spooked investors who had been in an upbeat mood owing to signs
from both sides indicating the first part of a wider agreement was close.
Worries about the trade talks also weighed on oil prices, with traders
concerned that a prolonged China-US trade war would hit long-term demand.
– Key figures around 1645 GMT –
London – FTSE 100: DOWN 0.2 percent at 7,416.43 points (close)
Frankfurt – DAX 30: DOWN 0.3 percent at 13,245.58 (close)
Paris – CAC 40: DOWN 0.2 percent at 5,912.72 (close)
EURO STOXX 50: DOWN 0.2 percent at 3,704.48
Tokyo – Nikkei 225: DOWN 0.1 percent at 23,409.14 (close)
Hong Kong – Hang Seng: DOWN 0.2 percent at 26,893.73 (close)
Shanghai – Composite: DOWN 0.5 percent at 2,889.69 (close)
New York – CLOSED for Thanksgiving Day
Euro/dollar: UP at $1.1008 from $1.0999 at 2100 GMT
Pound/dollar: DOWN at $1.2909 from $1.2921
Euro/pound: UP at 85.29 pence from 85.13
Dollar/yen: FLAT at 109.52 yen
Brent North Sea crude: DOWN 1.0 percent at $63.41 per barrel
West Texas Intermediate: DOWN 0.5 percent at $57.84 per barrel
BSS/AFP/HR/0928