Global stocks dropped Friday after China imposed new rules that seek to extend its powers over Hong Kong and allow it to crack down on dissent in the semi-autonomous region, setting Beijing up for a showdown with the US.
Hong Kong’s Hang Seng index shed more than 5% on the day, while European stocks also dropped, and US futures pointed to a fall of 0.7% on the Dow Jones Industrial Average.
Both US and international oil benchmarks also tumbled on the news.
“If it happens we’ll address that issue very strongly,” US President Donald Trump said on Thursday when asked about the possible imposition of a law such as the one introduced Friday.
“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,” one analyst said.
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Global stocks dropped on Friday after China imposed new rules on Hong Kong, effectively allowing Beijing greater control over the semi-autonomous region and allowing it to crack down more strongly on pro-democracy protests, setting the government up for a showdown with the US.
At the close of markets Friday, Hong Kong’s Hang Seng Index was down 5.7%, while in morning trade in Europe, all major indexes fell.
The central government in China said China’s ceremonial parliament is exploring a bill that could surpress opposition in Hong Kong and ban “treason, secession, sedition and subversion” in the former British colony.
Tensions flared in Hong Kong last June after plans to allow extradition to China were proposed. The move prompted mass violent protests and tensions have only recently receded due to the outbreak of COVID-19.
Here’s the market roundup as of 10:30 a.m. in London (5:30 a.m. ET):
Asian indexes fell with , Hong Kong’s Hang Seng down 5.8% , and Japan’s Nikkei down 0.8% and China’s Shanghai Composite down 0.6%.
European equities fell, with Germany’s DAX down 0.6%, Britain’s FTSE 100 down 1.3%, and the Euro Stoxx 50 down 1.1%.
US stocks are set to open lower. Futures underlying the Dow Jones Industrial Average, the S&P 500, and the Nasdaq fell around 0.7%.
Both West Texas Intermediate and Brent crude oil fell around 5%.
The benchmark 10-year Treasury yield fell 0.8% to 0.6721%.
Gold is up 0.5% to $1,734 per ounce.
Jeffrey Halley, a senior market analyst at OANDA covering Asia said: “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 from the SAR [Special Administrative Region].
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Halley added: “The inability of the United States and China to share the toys in the playground, while tiresome and somewhat despairing if you are not American or Chinese, should only …read more
Source:: Business Insider