|Day's range||24,250.98 - 24,647.28|
|52-week range||21,139.26 - 29,174.92|
Sentiment was helped by a survey showing China’s factory activity expanded at the fastest pace in nearly a decade in July.
The Australian share market ended higher; shaking off earlier fears a second national coronavirus wave could dent Australia’s economic recovery.
(Bloomberg) -- U.S. stocks fell as traders assessed corporate earnings amid a resurgence in global coronavirus cases. Bonds rose.The S&P 500 trimmed its monthly gain as worse-than-estimated results from McDonald’s Corp., 3M Co. and Harley-Davidson Inc. sent their shares slumping. Pfizer Inc. climbed after the drugmaker raised its earnings forecast and began a later-stage trial for a coronavirus vaccine with its German partner. Eastman Kodak Co. soared on news that it received a U.S. government loan.After the close of regular trading:Starbucks Corp. reported comparable sales that beat the average analyst estimate.Advanced Micro Devices Inc. increased its revenue forecast for the full year.Amgen Inc. reported profit that topped estimates and boosted its 2020 guidance.EBay Inc. raised its profit forecast for the year, but the new outlook disappointed investors.Visa Inc. said spending on the firm’s cards dropped in the fiscal third quarter.Some of the largest companies report earnings this week, and investors will look for clues on whether a resurgence of Covid-19 around the world will derail a recovery of corporate profits and the economy. The Federal Reserve extended most of its emergency lending programs by three months, through the remainder of 2020. A drop in consumer confidence added to evidence that the pace of the rebound is cooling as the virus interrupts reopenings in several states.“We’ve seen a number of beneficiaries of the lockdowns and a lot of companies really hurt by the lockdowns,” said Bill McMahon, chief investment officer of active strategies for Charles Schwab Investment Management. “There is still a lot of uncertainty about the rest of the year in how they guide.”The pandemic continues to rage in parts of the U.S., hot spots in Europe and across big emerging economies including India and Brazil. Governments are having to double down on the $11 trillion dollars worth of stimulus and unprecedented central bank support unleashed since the crisis began. The Fed is set to announce its rate decision Wednesday, and the market anticipates a dovish statement.“There’s enough stimulus and support in the market from a monetary policy perspective, but also from fiscal, and that keeps a nice floor under the market,” said Amanda Agati, chief investment strategist for PNC Financial Services Group. “But we also think it’s going to be very difficult to make a lot of forward progress in this environment.”Nasdaq’s biggest companies may struggle to surpass a performance milestone from the height of the 1990s dot-com era, according to Julian Emanuel, head of equity and derivatives strategy at BTIG LLC.The Nasdaq-100 was leading the S&P 500 for a 10th straight month as of Monday, according to data compiled by Bloomberg. If the tech-heavy gauge hangs onto the lead through Friday, it will match a record streak between May 1999 and February 2000 -- the final months before both indexes peaked. The latest run is at risk because of “poor share-price reactions to otherwise solid earnings reports” and other issues, he wrote.Here are some key events coming up:The Federal Open Market Committee holds its policy meeting on Tuesday, with an announcement due on Wednesday.Earnings include Rio Tinto and Barclays on Wednesday; Thursday brings Apple, Amazon.com, Alphabet, L’Oreal, Credit Suisse and Samsung; Chevron and Caterpillar are set for Friday.U.S. second-quarter GDP is expected on Thursday.China PMI data comes Friday.These are some of the main moves in markets:StocksThe S&P 500 decreased 0.6% as of 4 p.m. New York time.The Stoxx Europe 600 Index added 0.4%.The MSCI Asia Pacific Index advanced 0.4%.CurrenciesThe U.S. Dollar Index rose 0.1%.The euro declined 0.3% to $1.1716.The Japanese yen appreciated 0.3% to 105.08 per dollar.BondsThe yield on 10-year Treasuries declined four basis points to 0.58%.Germany’s 10-year yield fell two basis points to -0.51%.Britain’s 10-year yield was unchanged at 0.109%.CommoditiesThe Bloomberg Commodity Index was little changed.West Texas Intermediate crude decreased 1.6% to $40.92 a barrel.Gold strengthened 0.9% to $1,959.72 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The South Korean KOSPI Index and Hong Kong’s Hang Seng Index rose on Tuesday, buoyed by hopes of economic and corporate earnings recovery.
(Bloomberg) -- A new index focused on China’s technology giants is set to give investors greater access to their growing dominance in Hong Kong’s market.The Hang Seng Tech Index, which launched Monday with backdated prices, tracks the 30 largest tech companies listed in the city, including Tencent Holdings Ltd., Alibaba Group Holding Ltd., Meituan Dianping and Xiaomi Corp. Tracking the gauge this year would have returned 44% for investors, versus a loss of 13% for the Hang Seng Index. The tech measure fell 1.3% Monday.“All the conditions are now ready for large China tech stocks whether in China or already listed elsewhere,” Vincent Kwan, chief executive officer of index compiler Hang Seng Indexes Co., said on Bloomberg Television Monday.The move comes at a time when further listings of Chinese technology firms are in the pipeline, such as Jack Ma’s Ant Group, following those of NetEase Inc. and JD.com Inc. Listing closer to home has become more attractive as tensions between Washington and Beijing threaten to curtail Chinese companies’ access to U.S. capital markets.The compiler of the Hang Seng Index has already embraced change through moves such as scrapping a weighting limit for dual-class shares on some of its gauges. The tech index is seen helping investors bridge a gap between a Hong Kong benchmark overstuffed with old economy banks and insurers, and the technology companies that have emerged as big winners in the city’s beaten-down market.“There are too many laggards in the Hang Seng Index,” said Castor Pang, head of research at Core Pacific-Yamaichi International Hong Kong. “With overseas-listed Chinese firms deciding to list closer-to-home, the Hong Kong market falls short in terms of having a representative index for these stocks. This new index serves to fill this gap and drive capital flows.”Citi analysts led by Pierre Lau wrote in a recent note that the index will attract investors to other Hong Kong tech stocks, facilitate the issuance of index-linked funds and derivatives as well as boost turnover at Hong Kong Exchanges & Clearing Ltd. That stock is up 40% this year, most in the Hang Seng Index.Supported by strong mainland inflows through stock connect links, Chinese technology shares have emerged as big winners in Hong Kong this year. Tencent has surged 38% while Meituan is up 82%.The Hang Seng Index, on the other hand, has underperformed. Nearly half of its members have fallen at least 20% this year.Morgan Stanley sees the new technology gauge providing a bigger sentiment boost near-term to the MSCI China Index than the Hang Seng, which has few components that will also be in the tech index. “The direct stock-level positives cannot translate into a meaningful index-level boost,” analysts led by Laura Wang wrote.(Updates Monday’s prices throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Australian shares closed lower on Friday, led by tech stocks, wiping out a week’s worth of gains in the process.
(Bloomberg) -- U.S. stocks tumbled to the lowest in a week after an unexpected rise in jobless claims rekindled concern the economic recovery has stalled. The dollar weakened and Treasuries rose.The S&P 500 Index slipped from a four-month high, led by losses in technology firms and companies that make non-essential consumer goods. The Nasdaq 100 Index dropped to a two-week low and turned lower for the week, erasing Monday’s rally that was the biggest since April. Twitter Inc. jumped after daily-user growth surged, but Alphabet Inc., Amazon.com Inc and Apple Inc. each lost more than 3%. . Microsoft Corp. slumped after cloud growth slowed. Tesla Inc. slid even after results beat estimates.The first uptick in jobless claims since March comes as Congress negotiates a new relief package for millions of Americans who are set to lose enhanced benefits at the end of the month. Other worrying signs of economic slowing added to concern that the torrid growth in some areas will stall out.“The recovery is in place, but the labor market is really, really fragile,” said Gene Goldman, chief investment officer at Cetera Financial Group. “That’s going to weight on the markets and it’s going to weigh on consumers for a long time.”The 10-year Treasury yield fell to 0.58%, while Bloomberg’s dollar index weakened for a fifth straight day. Crude slumped, while precious metals continued their torrid run of gains that have taken gold and silver prices to multiyear highs.In Europe, the Stoxx 600 Index increased on gains in carmakers and consumer products, led by Unilever NV’s jump after sales fell less than expected. The yield on Italy’s benchmark bonds fell below 1% for the first time since March amid euphoria over the Europe Union’s pandemic recovery package.Positive signals emerging from an earnings season that is expected to be historically weak had been driving investors into risk assets. An increase in U.S.-China tensions and a resurgence in the virus across large swaths of America deadened some of that optimism.“Whenever the markets get to a point where there’s something just around the corner that they’re very focused on, that is when they sort of stop -- whether they were trending higher or trending lower -- they sort of start to trend sideways, but get choppy intra-day and start reacting more or less to headlines,” said Shawn Cruz, senior manager of trader strategy at TD Ameritrade Inc.Here are some key events coming up:Quarterly earnings gather steam, with reports due from Intel and Mattel.These are the main moves in markets:For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Australian shares dipped on Wednesday as fresh fears of a second COVID-19 wave were realized following a jump in the number of Victorian cases.
(Bloomberg) -- U.S. stocks eked out a third straight gain, though finished well off session highs after Senator Mitch McConnell cast doubt on reaching a fresh rescue bill before some current benefits expire.The S&P 500 rode a rally in energy and financial stocks to a fresh four-month high. Its advance was checked when the Senate majority leader told Politico he doesn’t expect a bill to pass within two weeks. Stocks were higher for most of the session after European Union leaders clinched a rescue package. That also sent the euro to the highest since 2019.“We are very likely getting a deal, but we should also expect dramatic headlines and the volatility associated with them,” said Dennis DeBusschere, a strategist at Evercore ISI.Tech shares led declines a day after the biggest rally since April. Corporate earnings and positive vaccine news had boosted sentiment. Texas Instruments reported earnings after the close. Oil surged, lifting Exxon Mobil and Chevron in the Dow Jones Industrial Average.The Nasdaq 100 edged lower after closing at an all-time high, with investors awaiting a spate of megacap tech earnings later this week. The gauge has surged 25% in 2020, in large part to a meteoric advance in Amazon.com Inc., which added $117 billion to its market value just on Monday.Nasdaq 100 Momentum Is Hottest in 20 Years on Amazon: ChartHere are some key events coming up:Quarterly earnings gather steam, with reports due from Microsoft, Blackstone Group, Roche, Intel, Unilever, Canadian Pacific, Tokyo Steel, Daimler, Hyundai and Mattel.The EIA crude oil inventory report is due Wednesday.U.S. weekly jobless claims come on Thursday.These are the main moves in markets:StocksThe S&P 500 Index rose 0.2% as of 4 p.m. New York time.The Nasdaq 100 Index fell 1.1%.The Stoxx Europe 600 Index increased 0.3%.The MSCI Emerging Market Index increased 2.1%.CurrenciesThe Bloomberg Dollar Spot Index declined 0.7%.The euro rose 0.6% to $1.1521.The British pound gained 0.6% to $1.2732.The Japanese yen strengthened 0.4% to 106.80 per dollar.BondsThe yield on 10-year Treasuries slipped to 0.60%.The two-year rate fell to 0.139%Germany’s 10-year yield rose less than one basis point to -0.46%.Britain’s 10-year yield dipped less two basis points to 0.136%.CommoditiesWest Texas Intermediate crude increased 2.8% to $41.96 a barrel.Silver strengthened 5.2% to $20.94 per ounce.Iron ore rose 1.9% to $108.02 per metric ton.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
European Union (EU) leaders reached a deal on a 750 billion Euro ($857 billion) recovery fund to help the region recover from the coronavirus crisis.
(Bloomberg) -- Hong Kong Exchanges & Clearing Ltd. surged as much as 9.5%, its biggest jump in five years, after billionaire Jack Ma’s Ant Group announced plans to seek a dual listing in Hong Kong and Shanghai, bypassing New York.Ant Group is seeking a valuation of more than $200 billion as it goes public, and could raise more than Saudi Aramco’s record $29 billion if market conditions are favorable, according to a person familiar with the matter. The Hong Kong portion could raise about $10 billion, according to people familiar with the matter, which would make it the sixth-largest initial public offering in the city.The listing is a boost to exchanges in Hong Kong and Shanghai, while dealing a blow to U.S. bourses as more Chinese firms look to raise money closer to home amid rising U.S.-China tensions. Hong Kong-listed Semiconductor Manufacturing International Corp. raised $7.5 billion from a Shanghai share sale in July, while Chinese internet firms JD.com Inc. and NetEase Inc. added secondary listings in Hong Kong this year.Ant’s IPO is also a major lift for the city of Hong Kong, which is facing mounting challenges from a sharp recession, political turmoil from year-long protests and a new national security law that has prompted concerns about an exodus from the financial hub.“Ant Group’s listing in Hong Kong will be a vote of confidence in the city,” according to Bruce Pang, head of macro research at China Renaissance Securities Hong Kong.Hong Kong Exchange Chief Executive Officer Charles Li said Ant Group’s “intention to IPO in Hong Kong, as well as in their home market, affirms Hong Kong’s role as the world’s leading international IPO market.”Index company Hang Seng Indexes Co. also announced plans to launch a new technology index effective July 27. Citigroup Inc. said in a research note that the index will attract investors to local tech shares and facilitate index-linked funds and derivatives, while attracting more high-quality Chinese tech companies to Hong Kong.Hong Kong Exchanges rose 8.7% to a record HK$376.20 at 2 p.m. The stock has surged 48% this year, the second-best performer on the Hang Seng Index, which has dropped 9.4% in 2020.(Updates with list of biggest IPOs)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Australian shares closed lower Monday, as authorities warned that the coronavirus outbreak in the country could take weeks to control.
(Bloomberg) -- Hong Kong, until recently an oasis of political stability in Asia, is now gripped with unprecedented regulatory and legal uncertainty that threatens its position as one of the world’s top financial hubs.China’s imposition of a sweeping, but vaguely worded national security law on June 30 has already begun to change the business landscape. Tech giants like Google and Facebook Inc. have suspended processing data requests from the government. Banks are struggling to figure out how to comply with the contradictions in U.S. and Chinese legal changes. Even mainland bankers in the city got a shock when China started taxing their incomes at rates as high as 45%, compared with 15% in Hong Kong.On Tuesday, President Donald Trump stripped away certain special privileges for Hong Kong under U.S. law. The landmark decision eliminated a range of measures that allowed the capitalist city different treatment from the mainland, from preferences for passport holders to allowing access to sensitive technologies to a Fulbright scholar exchange program. And he signed a law that would punish banks for dealing with officials facing sanctions.The escalating political turbulence, which follows months of anti-government demonstrations last year, has jarred a city that for decades served as a stable base for multinationals to access China. Now it’s firmly in the cross-hairs of a broader fight between Trump and Chinese President Xi Jinping, adding an element of unpredictability that could reshape the business environment even more than last year’s protests and the deep recession exacerbated by the pandemic.“The U.S. measures, alongside Beijing’s own crackdown on Hong Kong, are fast turning the city from an open, stable international financial center to contested ground at the very front lines of a rapidly intensifying geopolitical conflict,” said Antony Dapiran, a lawyer based in the city and author of “City on Fire: The Fight for Hong Kong.”China shot back immediately after Trump’s announcement, pledging to retaliate with unspecified strong countermeasures against U.S. officials and entities. In a statement Wednesday night, Hong Kong’s government said the U.S. move would cause “tremendous damage to the companies and people of the U.S.” and said it would “fully support the central government to adopt counter-measures and will not allow the U.S. hegemony to succeed.”Regina Ip, a member of Hong Kong leader Carrie Lam’s advisory Executive Council, said the U.S. measures would actually achieve the opposite of what Washington intends.“It will only drive more Hong Kong people to rely more and more on mainland China for support for our prosperity and stability,” Ip said in an interview. “This will not really effect the foundations of Hong Kong’s success as an international financial center, because the financial measures will only be imposed on individuals and entities identified under the act. It’s not as sweeping as some have suggested.”Hong Kong’s benchmark Hang Seng Index closed little changed Wednesday, after an initial 1.6% gain was wiped out. The gauge is down 11% over the past 12 months, compared with a 2.8% gain by MSCI’s index of world stocks.The real-world impact of the U.S. moves on Hong Kong’s trade will likely be limited, as the vast majority of the city’s shipments to the U.S. consist of re-exports, or goods passing through the city with no substantial modifications. Still, the marked deterioration in U.S.-China ties over the past few months, which has seen harsh rhetoric amid broader reconciliation over trade war issues harden into specific policy retaliations, means that Hong Kong is likely in for more turbulence as U.S.-China ties worsen.“I still think that the bar for the U.S. to take drastic actions is high,” said Tommy Wu, a senior economist at Oxford Economics. “But the uncertainty that has been generated will affect foreign business investment decisions in Hong Kong and will hurt the potential growth of the city.”‘Booking Flights’Hong Kong’s government, as well as China’s top officials overseeing the former British colony, have defended the national security law as a necessary instrument to restore stability that will only curtail criminal activity, not restrict freedoms of speech or expression. By one gauge of confidence in the finance hub -- the flow of capital -- Hong Kong appears to be holding up, with key metrics suggesting that, if anything, money continues to flow into the city rather than leave.Year-to-date, mainland investors have net bought a combined HK$356 billion worth of Hong Kong stocks, a record high compared with the same period in previous years, according to data compiled by Bloomberg. The pace of buying has picked up recently, with the net purchase in July is set for the biggest monthly inflow since March.However, the extremely broad provisions of the new law -- which bars subversion, secession, terrorism and collusion with foreign forces -- have left residents scrubbing social media accounts, business owners taking down pro-democracy posters, and business chambers saying companies may move assets and capital to other financial centers in part due to difficulties finding talent in Hong Kong.Euan Rellie, co-founder and senior managing director at investment banking firm BDA Partners based in New York, said world opinion was unified against the law, which he called “a self-inflicted wound for China.”“Bankers and private equity investors are booking their flights to Singapore,” Rellie said. “We know that Hong Kong’s population is dismayed by the latest turn of events. It feels like bad news after bad news.”Things could get worse yet if banks and other financial institutions eventually face sanctions under the Hong Kong Autonomy Act that Trump signed Tuesday. Even if Beijing pushes back, the U.S. actions will still hit the city’s global reputation in financial markets and could make it a less favorable spot to conduct business, said Willy Lam, an adjunct professor at the Chinese University of Hong Kong’s Centre for China Studies, who has authored numerous books on Chinese politics.“It’s also possible that fewer American businesses may want to do business with Hong Kong,” Lam said. “They may move directly to Shanghai or other financial centers in Asia such as Singapore.”Rents for luxury homes on Hong Kong Island fell by 2.6% in the second quarter from the previous three months, according to Savills Plc. The property agency expects rents to fall even further later in the year as more expatriates will be forced to leave the city when many firms are shedding staff.Despite the raft of bad news, Trump this week endorsed the trade deal reached with China earlier this year. And he ruled out more drastic measures that could undermine Hong Kong’s dollar peg, which could impact financial stability across the globe.There’s little sense things will improve even after the U.S. election in November. Joe Biden, the presumptive Democratic nominee, is likely to stick by all of Trump’s recent moves if the former vice president takes office, said Richard McGregor, a senior fellow at the Lowy Institute in Sydney and author of “The Party: The Secret World of China’s Communist Rulers.”“There’s no floor under the U.S.-China relationship,” he told Bloomberg Television. “We keep finding new lows.”(Updates with Euan Rellie comment in final section.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
After a quiet start to the week, there is plenty for the markets to consider. Economic data, COVID-19, geopolitics, and monetary policy are in focus.
The benchmark Nikkei Index hit its highest level since June 10, with industrial and consumer directional shares leading the advance.
(Bloomberg) -- A relentless run of bad news keeps grinding down Hong Kong’s stock bulls. Protests, a global pandemic, a collapsing economy, a crackdown on individual freedoms and now the end of the city’s special status with the U.S.The Hang Seng Index closed little changed, wiping out an initial 1.6% advance. Chinese technology firms were the worst performers, along with Hong Kong property developers. Mainland Chinese shares also declined.While the latest news was expected, it highlights Hong Kong’s growing vulnerability to heightened tensions between Beijing and Washington, and adds to the bear case for the city’s listed equities given the unknown impact of sanctions.“U.S. sanctions have been an overhang for Hong Kong assets,” said Steven Leung, executive director at UOB Kay Hian. “Worries include how it will affect the city’s trade in the future and also there have been fears that banks in the city could be banned from buying the greenback. Investors will give a discount when considering buying assets here given all these worries.”The Hang Seng Index is already a global laggard: the gauge lost 11% over the past 12 months through Wednesday, compared with a nearly 3% gain by MSCI’s index of world stocks. Against U.S. and mainland Chinese benchmarks, Hong Kong’s underperformance is even more stark. The S&P 500 Index and CSI 300 Index have rallied at least 6% in the past year.By almost any measure, Hong Kong stocks appear cheap. The Hang Seng Index trades at 10.8 times projected 12-months earnings, compared with 14 times for the CSI 300 Index and 22 times for the S&P 500.President Donald Trump approved the legislation on Tuesday after spending weeks blaming Beijing for the coronavirus pandemic and criticizing its handling of Hong Kong and treatment of minority groups in western China. Under the United States-Hong Kong Policy Act of 1992, the U.S. treats Hong Kong differently than the Chinese mainland in trade, commerce and other areas.Trump said that the executive order he signed earlier in the day meant Hong Kong would now be treated the same as mainland China. The White House said the order would revoke special treatment for Hong Kong passport holders and ends Hong Kong’s benefits of U.S. exports.“In the longer term, this adds another needless layer of uncertainty to already frosty Sino-US relationships, especially with regards to trade,” said Justin Tang, head of Asian research at United First Partners. “Against the backdrop of COVID-19 related disruptions, an escalation of trade wars will plunge supply chains into further disarray.”To be sure, the Hang Seng Index had a flurry of gains around the imposition of the national security law at the start of this month, supported by mainland inflows. Those gains have faded in the past week, placing the gauge among the bottom 10 performers among 93 global benchmarks tracked by Bloomberg.Adding to the bear case is a spike in local coronavirus cases, which this week prompted the government to impose some of the most drastic measures yet to contain the outbreak.“Stocks are underperforming because the local economy is struggling,” UOB’s Leung said. “The virus situation worsened recently and many economic activities have been affected.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- U.S. stocks posted their biggest gain in more than a week amid a late session surge, led by rallies in the energy, materials and industrial sectors. The dollar weakened to an almost five-week low and Treasuries were little changed.After the close of regular trading, the SPDR S&P 500 ETF Trust (SPY) jumped on news that Moderna Inc.’s Covid-19 vaccine produced antibodies to the coronavirus in all patients tested in an initial safety trial. The S&P 500 climbed as investors weighed earnings season and the economic hit of rising virus cases. Megacap tech shares were initially headed for the first two-day slide since mid-May, before rallying late in the session. Banks were mixed after JPMorgan Chase & Co. reported strong trading results, while Wells Fargo & Co. tumbled after cutting its dividend and reporting its first quarterly loss since 2008.“We may see this earnings season as one where companies speak honestly and send a slightly different message than, we’re never going to look back from the bottom,” said Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. “I think it’s appropriate that companies are honest even if it’s deemed as throwing cold water on the v-shaped narrative.”Volatility remained high. U.S. stocks finished in the red yesterday after the S&P 500 briefly touching the highest level since the coronavirus pandemic. Equities have largely treaded water over the past month as worries about new virus cases are offset by optimism over stimulus spending and the economic recovery.Still as new outbreaks appear around the world, officials are putting stricter measures in place to control the spread. Japan said a new state of emergency is possible and Hong Kong implemented its toughest social distancing measures yet. Florida reported a record number of coronavirus deaths among residents, while Arizona had the most new cases in 11 days.”It’s this tug-of-war between the forward-looking assumption around a vaccine and treatment versus what is happening today as it relates to cases, the mortality rate and, more broadly, the spread,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management.The U.K.’s two-year bonds yielded less than Japanese debt for the first time. Copper ended a six-day winning streak amid renewed tensions between Beijing and Washington.In Asia, equities were broadly lower with Chinese and Hong Kong shares faring the worst. The Trump administration rejected China’s expansive maritime claims in the South China Sea, reversing a previous policy of not taking sides in such disputes.U.S. Denounces China’s Claims to South China Sea as Unlawful Here are some key events coming up:The EIA crude oil inventory report is due Wednesday.China releases second-quarter GDP on Thursday as well as key economic indicators for June.The European Central Bank meets to set monetary policy on Thursday, with President Christine Lagarde holding a virtual press conference afterward.These are some of the main moves in markets:For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The PBOC indicated there was little need for more emergency measures that had been rolled out as COVID-19 hit business activity earlier this year.
(Bloomberg) -- The Hong Kong dollar is suddenly appearing more vulnerable, after weeks of trading at the strong end of its band against the greenback.Late on Friday, the currency weakened in its biggest drop since mid-June, when the exchange rate was buffeted by Beijing’s decision to impose laws curbing dissent in the city. The decline, which has since almost been erased, was unexpected, given persistent inflows into the former British colony. Traders are watching the Hong Kong dollar closely for any signs of outflows from the former British colony amid worsening U.S.-China tensions and doubts over the city’s future as a financial hub. Over the weekend almost 600,000 residents defied the new security law to vote in primaries held by pro-democracy opposition parties, even after a government minister suggested that participating could run afoul of the law.“The depreciation might be an early sign of concerns over the U.S.’s financial sanctions as supportive factors such as large listings and dividend payments may start to cool down later in July,” said Ken Cheung, chief Asian currency strategist at Mizuho Bank Ltd. “The narrower rate spread with the greenback is also hurting the Hong Kong dollar, which may stay away from the strong end and weaken to 7.7550 in the near term.”The Hong Kong dollar was 0.03% stronger as of 2:37 p.m. local time on Monday, virtually wiping out the decline at the end of last week.There is so far little evidence that traders are betting on sustained weakness. The Hong Kong dollar’s three-month risk reversal, a gauge of bearishness in the options market, is close to the lowest level since August despite a small uptick on Friday. The currency’s forward points of the same tenor are near a four-month low, reflecting limited concerns on depreciation or liquidity tightness.The gap between the Hong Kong dollar’s one-month Hibor and the borrowing costs on the greenback was last at 22 basis points, close to the 20 basis point level which OCBC Wing Hang Bank Ltd. has said would make the long carry trade unattractive.The Hong Kong Monetary Authority sold HK$48.7 billion ($6.3 billion) last week alone to keep the currency from strengthening beyond its trading band. That was despite news some Trump aides are considering ways to undermine the peg mechanism, according to people familiar with the matter.Friday’s loss also came after the Hang Seng Index fell 1.8%, paring its gain for the week to 1.4%.(Updates the fifth paragraph with the Hong Kong dollar’s latest price.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Hong Kong reported 32 additional local coronavirus cases on Friday, adding to a resurgence of infections that is forcing the financial hub to reinstate restrictions that had been recently loosened, including the closing of schools.The new cases come after the city recorded 34 locally transmitted infections on Thursday, the most in a single day since the pandemic began. The outbreak in Hong Kong, while small relative to those in the U.S. and elsewhere, follows weeks of normalized activity as people returned to work and restaurants filled up again. Hong Kong started reopening schools in late May after four months of at-home classes.All schools will now break for summer holiday starting Monday, Hong Kong Secretary for Education Kevin Yeung said in a briefing earlier Friday. Stocks slid on the news, with the benchmark Hang Seng Index dropping 1.8%, while the Hang Seng China Enterprises gauge slipped 2.2%, its biggest drop since May 22.The new infections have also pushed Hong Kong to tighten social restrictions again, with the government announcing Thursday it will cap restaurant capacity at 60% starting this weekend. There will be a limit of eight people per table, while bars will be restricted to four per table.Hong Kong has suppressed two waves of infection in February and April and its total outbreak numbers only 1,403 cases. But this week’s jump in infections is raising alarm, as cases that can’t be traced suggest that hidden chains of transmission have been circulating in the city for some time.Read more: Record Spikes in Hong Kong, Tokyo Feed Fears of Asia Second WaveOther cities in the region that have seen previous success in containing the virus are also experiencing new waves of infections. Flareups in Melbourne, Beijing and Tokyo -- which reported a record day of new cases Friday -- are a reminder that the pandemic is far from over. Without an effective and widely distributed vaccine, cities are likely to continue in a state of limbo where the easing of social distancing measures or lax implementation will lead to a spike in infections.Schools have been a particular concern among Hong Kong residents. Parents have worried about their children’s health and safety after multiple confirmed cases emerged in different schools on the same day. The government came under criticism from some parents for not shutting down classes sooner, and some schools already decided to close before Friday’s announcement.(Updates with new cases in first paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- HSBC Holdings Plc, which draws more than two-thirds of its pretax income from Hong Kong, slumped as advisers to U.S. President Donald Trump discussed a potential move to punish banks in the city and destabilize the currency peg to the dollar.Europe’s largest financial institution was named as a potential target, Bloomberg News reported, citing people familiar with the matter. U.S. Secretary of State Michael Pompeo last month singled out Peter Wong, the bank’s Asia-Pacific chief executive officer, for signing a petition supporting “Beijing’s disastrous decision to destroy Hong Kong’s autonomy.”“Disruption to the currency peg and dollar funding, with HSBC reporting in U.S. dollars, could erode revenue and accelerate material changes in its dual listing and structure,” Bloomberg Intelligence analysts Jonathan Tyce and Francis Chan wrote on Wednesday.“HSBC’s to-do list remains considerable, though a wait-and-see approach -- with November’s U.S. election the due-date -- may be adopted for the latest peg and funding turbulence,” they wrote.London-based HSBC has been walking a political tightrope as it seeks to expand in China in a bid to boost profits, shifting away from struggling operations in Europe and the U.S. The bank last month endorsed China’s new security law.The U.S. clearing license is vital to HSBC’s global operations and the bank is one of the largest international lenders operating in America. HSBC recently hired James Forese, a former senior executive at Citigroup Inc., to its board as it looks to revamp its global business including its underperforming U.S. unit.HSBC is also the largest note-issuing bank in Hong Kong, putting it at more risk than Standard Chartered Plc. and BOC Hong Kong Holdings Ltd. should the U.S. limit their ability to buy dollars.HSBC announced last month it would revive a massive cost reduction plan that had been put on halt due to the virus. The bank plans to shrink U.S. retail, French and non-ring fenced U.K. exposure, and cut about 35,000 roles globally.In a statement on its official WeChat account in June, the bank pledged to continue to invest and support the Chinese economy after speculation in local media that its massive restructuring plan would mean an exit from China.Some top advisers to President Donald Trump want the U.S. to undermine the Hong Kong dollar’s peg to the U.S. currency to punish China for recent moves to chip away at Hong Kong’s political freedoms, according to people familiar with the matter. The proposal, however, hasn’t been elevated to the senior levels of the White House, and faces strong opposition from others in the administration who worry such a move would only hurt Hong Kong banks and the U.S., not China, said the people.HSBC fell about 4.3% in Hong Kong, making it the biggest drag on the benchmark Hang Seng Index. The bank’s stock declined as much as 4.3% in early London trading, extending this year’s loss to 36%. A Hong Kong-based spokeswoman declined to comment on the U.S. report.(Adds more detail from Bloomberg Intelligence in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.