European markets worried about Hong Kong

PARIS ( / hooly News) – European markets were weakened on Friday by worsening Sino-American tensions, this time linked to the political situation in Hong Kong.

Paris (-0.02%), Frankfurt (+ 0.07%) and Madrid (+ 0.17%) ended without direction. London fell 0.37%. On the Milan Stock Exchange, optimism resisted (+ 1.34%). In Zurich, the SMI ended with a fall of 1.04%.

At the time of the European closure, Wall Street was retreating, preparing for a three-day weekend in the United States.

“The risk has shifted from Covid-19 to the deterioration of Sino-US relations with a very controversial security law announced by Beijing,” said Stephen Innes, strategist at AxiCorp.

“With public holidays in Europe and the closing of the American and British markets on Monday, volumes are reduced” and investors are “not willing to add risk before Tuesday,” he added.

China has decided to impose a “national security” law in Hong Kong aimed at prohibiting “treason, secession, sedition (and) subversion”.

“Beijing is tightening its grip on Hong Kong” which could cause US President Donald Trump to react and “renewing trade tensions between the United States and China, which explains the feverishness of investors”, underlines David Madden, analyst at CMC Markets.

US Foreign Minister Mike Pompeo urged Beijing “firmly” to reconsider its disastrous proposal.

While China presents this bill as essential to the stability of this international financial center, the Hong Kong Stock Exchange closed Friday down more than 5%.

This bill aims to repress opponents of central power, in the wake of the gigantic pro-democracy protests that shook the semi-autonomous territory last year.

The initiative “overshadowed the National People’s Congress of China, which was to be devoted to growth targets and stimulus packages,” said Innes.

Indeed, for the first time in its recent history, Beijing has given up setting a growth target for the current year, failing to be able to quantify the impact of the pandemic.

Instead, China praised its strategy for running the Covid-19 during the annual high mass of Communist power.

These apprehensions are added to that always significant of a new outbreak of contaminations as the economies deconfine.

The new coronavirus, which has affected more than 5 million people and killed more than 332,800 people, continues to gallop in Brazil and Russia.

“The fog is not lifted on the evolution of the epidemic, the economy and politics or geopolitics”, summarizes for his part Hubert Tassin at Gaspal Gestion.

Financial stocks exposed to the Asian market fell like the banks HSBC (-4.99% to 379.00 pence) and Standard Chartered (-2.43% to 382.00 pence), as well as the insurer Prudential (-9.29% to 1,011.00 pence).

Raw materials have lagged behind, like Eramet (-3.31% to 28 euros) or ArcelorMittal (-1.56% to 8.22 euros).

Renault increased its losses (-2.86% to 17.20 euros), the Minister of Economy Bruno Le Maire having affirmed that the group was playing “its survival” and had to commit in particular to the maintenance in France of certain activities.

Lufthansa fell (-1.16% to 8.04 euros) while the agreement between the group and the state on a rescue plan of 9 billion euros is delayed at least until the beginning of next week , according to several media.

hooly News / rp