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US: Stocks sag on China tensions as Europe rises on restarts

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Wall Street stocks stumbled in late afternoon trading on Thursday on rising tensions between Washington and Beijing, after European bourses advanced as more of the continent took steps to end coronavirus shutdowns.

[NEW YORK] Wall Street stocks stumbled in late afternoon trading on Thursday on rising tensions between Washington and Beijing, after European bourses advanced as more of the continent took steps to end coronavirus shutdowns.

US stocks had been in positive territory most of the day despite poor economic data, but finally pulled back after US President Donald Trump announced he would hold a press conference on China on Friday.

The announcement follows strong US criticism of a security law allowing China to tighten its grip on Hong Kong.

Mr Trump has also blamed Beijing for the coronavirus outbreak that has killed 100,000 Americans and added new uncertainty to his re-election prospects.

The twin developments have investors fearing the return of a revived US-China trade war.

"At the moment, it's just talk, primarily, but you can't ignore it completely because, as we've seen in the past with this kind of thing, once it escalates, it escalates very quickly," said JJ Kinahan, chief market strategist at TD Ameritrade.

Labor Department data showed another 2.12 million people filed for unemployment in the United States last week, pushing total layoffs since the start of the coronavirus crisis to more than 40 million.

New orders for US manufactured goods also plunged 17.2 per cent in April after a similar steep decline in March, the Commerce Department reported.

Though terrible, the data was not significantly worse than expected and investors shrugged it off for most of the day.

PARIS CAFES TO REOPEN 

Earlier, major European bourses gained more than one per cent as Italy set June 20 as the date for the Serie A football league to resume, while France announced the long-awaited nationwide reopening of bars, restaurants and cafes from June 2, albeit with restrictions.

"Equity markets in Europe are set to finish the day in positive territory as traders are hoping that governments will continue to loosen their lockdown restrictions," said CMC Markets analyst David Madden.

"The reopening of economies has been a common theme across the markets in recent weeks, and it's the reason why stocks have been bullish lately."

Europe's bourses had vaulted higher on Wednesday after EU leaders unveiled a vast 750 billion euro (S$1.06 trillion) proposal to the European Parliament and member states.

If passed, the deal - which aims to help the worst-affected countries with a mix of grants and loans - would be the biggest EU stimulus package ever.

In Asia, Tokyo's Nikkei jumped 2.3 per cent, ending at a three-month high on optimism over the gradual reopening of virus-hit economies worldwide, even as investors kept a close eye on the acrimony between Beijing and Washington.

Hong Kong stocks shed 0.7 per cent after China's parliament pushed ahead with the new security law.

AFP

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