From Bloomberg’s “Stocks Drop With U.S. Futures on Hong Kong Worries” posted early Friday morning:
Stocks slipped and U.S. equity futures retreated on Friday as investors braced for tensions between Washington and Beijing to escalate after China announced plans to impose a national security law on Hong Kong. Treasuries climbed with the dollar while oil snapped a six-day winning steak.
Food and insurance companies led the Stoxx Europe 600 Index lower while contracts on the three main American equity gauges all pointed to losses on Wall Street. The risk-off tone took hold in Asia, where Hong Kong’s benchmark stock index plunged more than 5%. The yuan dipped as China’s National People’s Congress abandoned its decades-long practice of setting an annual target for economic growth amid uncertainty unleashed by the coronavirus pandemic.
The prospect of fresh turmoil in Hong Kong following sweeping national security legislation introduced by China comes as the relationship between the world’s two biggest economies appears to be souring. The S&P 500 closed lower on Thursday, with signs mounting that President Donald Trump will make his tough stance on China a key element of his re-election bid. Beijing responded to accusations from Trump, warning that it will safeguard its sovereignty, security and interests, and threatened countermeasures.
It all risks choking the rally that took global equities up about 30% from the March lows, spurred by stimulus measures and optimism for a swift economic recovery from the virus.
My take: They call it a rally, I call it a recovery.