FILE PHOTO: A man wearing protective face mask, following an outbreak of the coronavirus, is reflected on a screen displaying stock prices outside a brokerage in Tokyo, Japan March 6, 2020. REUTERS/Issei Kato
May 21, 2020
By Chris Prentice
WASHINGTON (Reuters) – Asian shares were set for another retreat on Friday as U.S.-China tensions curbed investor risk appetite and caused global equity markets to stumble.
Hong Kong futures <HSIc1> fell 1.59% and Nikkei futures <NKc1> were trading below the Nikkei 225 index’s <.N225> previous close, pointing to opening loss of 0.1%.
Australian S&P/ASX 200 futures <YAPcm1> eased 0.13%.
Global equities pulled back after Beijing was set to impose new national security legislation on Hong Kong. The move drew a warning from President Donald Trump, who said the United States would react “very strongly” against it.
The back-and-forth between the world’s two largest economies stoked worries that the tensions could threaten “Phase 1” of a U.S.-China trade deal reached early this year.
That prompted Wall Street shares to slip from the two-month highs made in the previous session on hopes of a economic recovery as governments began to lift their coronavirus restrictions.
The majority of the 11 S&P sector indexes declined, leaving the main benchmark S&P 500 <.SPX> down 0.78%. Dow Jones Industrial Average <.DJI> finished down 0.41% and the Nasdaq Composite <.IXIC> fell 0.97%.
The U.S. dollar, seen as a safe-haven, rose amid those concerns. The dollar index <=USD>, which measures the greenback’s strength against six major currencies, was up 0.1%.
Spot gold <XAU=>, also typically seen as a risk-off option, was little-changed after losses of 1% as investors booked profits or opted for cash.
Brazil’s real <BRBY> jumped after the central bank said it was ready to increase support for the currency. The country is expected to soon become the second-worst hit globally by the pandemic as cases approach 300,000.
Crude oil futures <LCOc1> rose to their highest since March, as recovering demand and production cuts offset investor jitters seen in other markets.
“Thus far, traders were right to call a trough in global demand in April,” AxiCorp Chief Global Markets Strategist Stephen Innes said in a daily note. “Still, oil prices will remain sensitive to any hint that the easing of global lockdowns might result in the 2nd wave of COVID-19 infections and, therefore, a more protracted impact on demand.”
(Reporting by Chris Prentice in Washington; Editing by Sam Holmes)
