Stocks drop amid rising china tension and job losses
U.S. stocks fell as rising trade tension between America and China added to concern about the pace of recovery from the coronavirus pandemic. Crude oil rebounded from an earlier swoon and gold declined.
The Standard & Poor’s 500 index declined 0.8%, with signs mounting that President Trump will make his tough-on-China stance a key element of his reelection bid. The energy, technology and utilities sectors led the losses. After rallying as much as 32% from its March bottom, the index failed to hold at its average price over the last 100 days, a key technical level it hasn’t closed above since February. Trade tension with China contributed to market weakness in 2019 before a deal was reached.
Stocks hit the lows of the day after China responded to overnight accusations from Trump, warning that it will safeguard its sovereignty, security and interests, and threatened countermeasures. Earlier, a report showed an additional 2.44 million Americans claiming jobless benefits.
Markets were already on the back foot after the Senate overwhelmingly passed a bill that could bar some Chinese companies from listing on U.S. exchanges. Trump stoked tensions by tweeting criticism of Xi Jinping’s leadership, days before the biggest Chinese political gathering of the year.
The Stoxx Europe 600 index fell, with nearly all 19 sector groups in the red. Deutsche Lufthansa shares bucked the trend after the carrier said it was close to a multibillion-euro bailout deal from the German government.
Concern over the stress between the U.S. and China and global coronavirus cases reaching 5 million are vying for investor attention with optimism over reopening economies and progress on thwarting the pandemic. The U.S. legislation could lead to Chinese mega-companies such as Alibaba Group Holding Ltd. and Baidu Inc. being barred from exchanges.
Overseas listings of Hong Kong shares fell as Chinese authorities prepared to pass national security measures, threatening to reignite violent protests in the city. The iShares MSCI Hong Kong ETF, the biggest listed exchange-traded fund, fell 3.7% in New York, the biggest drop since the global market volatility two months ago. Hang Seng index futures for May delivery were off 1.6%.
The fresh jobless data has once again underscored the economic hit from the virus. The latest jump in claimants takes the number of newly unemployed since the crisis began nine weeks ago to almost 40 million.
