Asian Market in Red as Fresh Sino-American Tensions Rise
Stocks retreated across the Asian market with the Hong Kong index reporting its worst figures on Monday. In its place, the S&P 500 Index and the Nasdaq composite fluctuated.
The Nasdaq hit another record after finishing in the red, while the S&P inched to its highest since the pandemic began.
Hong Kong imposed its strictest social distancing measures to date this week. The action followed a surge of 41 coronavirus cases in the city on Monday alone.
The Hang Seng index fell by 1.42% in Asian after trading, while China’s Shanghai Composite slid 0.55%. The Shenzhen component also went down by 0.17%.
Other indices in the Asian market also fell. Japan’s Nikkei 225 went down by 0.87% while South Korea’s KOSPI shrunk 0.41%.
Worries about the Australian economy also pushed its stock index down by 0.55% with re-imposing lockdowns in Sydney.
Unexpectedly strong returns from equity markets worried Asian market analysts. A pull-back in asset prices shows signs of economic pessimism, according to CIO for AXA Investment Managers Chris Iggo.
Global equities are rallying from March lows, but oil declined below $40 a barrel before an OPEC+ meeting this week. The group may announce plans to start slowing down historic production cuts.
Gold also dipped on Monday.
Stock Market Influencers
The tensions between US and China are rising after the US Secretary Michael Pompeo rejected China’s claims over the South China Sea. He had issued his statement after China’s military exercises in the controversial seas surrounding the Paracel islands.
On Tuesday morning, China rejected the US statement, calling Pompeo’s allegations of bullying its neighbors was unjustified.
The South China Sea is now a part of the tensions between the two most powerful economies. Ongoing conflicts included trade and national security laws in Hong Kong earlier this year.
In the meantime, the market is waiting for China’s GDP figures and trade data, due on Thursday.
The US stock market is also focusing on the rapidly increasing number of new coronavirus cases in the country, as well. Although it’s important to note that hospitalization rates have trended down since April, things won’t return to normal anytime soon.
California’s governor, Gavin Newsom, also raised concerns about the state’s re-opening plan. Similar to Hong Kong, he also re-imposed strict lockdowns on Monday.
Economists hope that the degree to which Americans would get infected wouldn’t affect upcoming stock trading. There was another surge in the Asian market after it became the first area to recover, which shows bleak signs for the global economy.
Singapore also just saw its economy plunge into recession last quarter, right before the earnings report due this week.
