U.S. stocks rebounded on Friday after declining recently. Still, investors were whipsawed by the market’s volatility that continued throughout the week.
Three major American equity futures saw modest losses due to escalating tensions between Washington and Beijing. China also stated that it plans to impose a national security law on Hong Kong, causing unrest in the markets.
However, U.S.shares recovered shortly thereafter. The S&P 500 moved into the green, gaining 0.2% by the end. The world’s biggest tractor maker, Deere & Co., also climbed up in premarket trading after it announced higher-than-expected earnings.
European futures, on the other hand, haven’t fared so well. The Stoxx Europe 600 Index lowered by 0.2% by the influence of food and mining companies. Nonetheless, it managed to recover a little at the end of the session. So far, Germany’s DAX Index remained little changed.
What about Asian stocks?
The MSCI Asia Pacific Index dropped down by 1.9%. The mood was subdued in Asia, as the tone of little risk had retaken hold on the market. Hong Kong’s benchmark stock index plummeted down by more than 5% during a broad sell-off.
China’s National People’s Congress declined to set an annual target for economic growth due to the uncertainty caused by the coronavirus pandemic. That decision further distressed investors.
It seems the relationship between the U.S. and China is deteriorating fast. On Thursday, the S&P 500 closed lower as mounting signs indicated that President Donald Trump plans to use his tough stance on China as a key element of his re-election bid.
Meanwhile, Beijing also responded to accusations from Trump, declaring that it will safeguard its sovereignty, as well as security and interests. All this turmoil threatens the rally, which boosted global equities, raising them by 30% from the March lows.
Sebastien Barbe, Credit Agricole CIB’s head of emerging-market research and strategy, noted that despite both sides highlighting overnight progress on trade deal implementation and agreeing to keep it going, the overall relationship between two countries is souring rapidly. He expects this to continue until the U.S. presidential elections in November.
