Further strains were added to U.S. & China relations as China came out on Friday saying they're looking to impose new national security legislation in Hong Kong. This caused oil and equity markets to tumble as this brought a fresh
cloud on the economic recovery prospects.
China also dropped its annual growth target for the first time, adding to uncertainty about the fallout from the COVID-19 pandemic, boosting safe-haven investments such as U.S. Treasuries US10YT=RR and the dollar.
China said it would impose new national security legislation on Hong Kong, leading President Donald Trump to warn that Washington would react “very strongly” against any attempt to gain more control over the former British colony.
Emerging market shares slid -2.72%. Stocks in Europe closed mostly flat and on Wall Street finished mixed as investors prepared for a long weekend in the United States, the UK and elsewhere.
After trading lower most of the session, Wall Street trended upward in late trading, with the S&P and the Dow managing to finish higher.
Tensions between the world’s two largest economies have risen in recent weeks, with Washington ramping up criticism of China over the origins of the coronavirus pandemic, raising fears the rhetoric could crimp economic growth.
The U.S. Commerce Department said late in the session that it is adding 33 Chinese companies and other institutions to a blacklist for human rights violations and to address U.S. national security concerns.
The resurgent U.S.-China standoff weighed on oil prices.
Of major asset classes, crude oil has rebounded the most off the year’s lows on hopes world economies will soon recover from coronavirus-induced business shutdowns.
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