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AFP
May 23, 2020

Hong Kong tensions unnerve world stocks, oil tumbles

Business

AFP
May 23, 2020

London: World stocks took a hit and the Chinese yuan weakened on Friday as Beijing moved to impose a new security law on Hong Kong after last year’s pro-democracy unrest, further straining fast-deteriorating US-China ties.

Wall Street opened lower after heavy losses for Hong Kong where China pushed for a national security law. After months of concentrating on the economic impact of the coronavirus, traders´ attention is once again also on China-US tensions, already exacerbated by US President Donald Trump´s constant criticism of Beijing´s handling of the pandemic.

Hong Kong´s main stocks index closed down more than five percent, with financials and property firms battered as investors fretted about the city´s economic future.

"Riots in the street and plummeting real estate markets might be the least of Hong Kong´s building wall of worry as this authoritarian national security plan will most certainly bring into question (the city´s) status as a global banking centre," said Stephen Innes of AxiCorp.

After Chinese officials refrained from offering a 2020 growth target in light of the coronavirus, Wall Street sagged with the Dow Jones Industrial Average off 0.4 percent five minutes into the session. The broad-based S&P 500 and the tech-heavy Nasdaq shed 0.3 percent.

London suffered modest losses mid-session while Frankfurt and Paris were just

in positive territory two hours from the close. The pound held up following official data, which as expected, showed a record drop in UK retail sales and unprecedented surge

in government borrowing to £62 billion ($75.5 billion/69 billion euros) during April, the country´s only full-month of total lockdown.

Britain´s fiscal watchdog, the Office for Budget Responsibility, warned that was just an "initial taste" of the pandemic damage. HSBC Global Research highlighted the "massive fiscal cost from COVID-19" while noting that the latest fiscal numbers are "eye-watering."

Concerns about China-US tensions have taken away from news that more countries were edging out of virus lockdowns after new deaths and infections eased and observers said the worst of the pain for the global economy may have passed.

Still, the US reported another 2.43 million workers applied for unemployment benefits last week, bringing the total of newly jobless since the shutdowns began in mid-March to 38.6 million.

The fresh uncertainty also weighed on oil prices but WTI and Brent crude pared down initial losses of around 5 percent and main contracts remained above $30 per barrel thanks to a huge cut in output by key producers and on hopes for increased demand as lockdowns are lifted.