Stocks Unfazed By Latest Spike In US-China Tensions

Stock markets largely shrugged off Monday the latest spike in US and Chinese tensions as a review of a crucial trade deal approaches

London, (UrduPoint / Pakistan Point News - 10th Aug, 2020 ):Stock markets largely shrugged off Monday the latest spike in US and Chinese tensions as a review of a crucial trade deal approaches.

Europe's main markets closed higher while New York's top indices were mixed.

Talks on the phase one US-China trade deal are set for this weekend, but the US administration imposed sanctions on several Hong Kong officials, with Beijing slapping sanctions on a number of leading Americans.

"With trade talks -- via videoconference -- scheduled for Saturday, you'd think investors would be in a state of distress over the tinderbox situation between the two superpowers," said market analyst Connor Campbell at Speadex.

"Instead the markets were fairly blas about a topic that has caused triple-digit losses in the past," he added.

Away from domestic policy, Washington has slapped sanctions on a group of Chinese and Hong Kong officials -- including the city's leader Carrie Lam -- in the latest salvo of a row linked to Beijing's decision to impose a security law on the city.

China on Monday sanctioned 11 Americans, including senators Marco Rubio and Ted Cruz, in retaliation to the US measures.

Hong Kong media mogul Jimmy Lai, one of the city's most vocal Beijing critics, was meanwhile arrested Monday under the security law, deepening a crackdown on democracy supporters.

It comes after the White House set the clock ticking on forcing Chinese internet giants TikTok and WeChat to end all operations in the US, as part of a diplomatic-commercial offensive analysts fear will likely worsen leading into November's American presidential election.

- 'Barbarous and rude' - China slammed the sanctions as "barbarous and rude".

US regulators have also recommended overseas firms listed in the US should be subject to local public audit reviews from 2022, which could cause Chinese firms to delist.

The White House has further angered China after Health Secretary Alex Azar met Taiwan's leader in the highest level visit from the United States since it switched diplomatic recognition from the island to China in 1979.

The developments have put the spotlight on Saturday's meeting of trade officials to review their "phase one" deal signed in January.

There is a concern that the pact could be torn up as China has failed to meet certain criteria owing to the impact of the virus, a move most experts say would be devastating to a global economy that is already teetering.

Still, National Australia Bank's Tapas Strickland said: "The running assumption in markets has been President Trump needed the phase one deal to succeed (as much as China) this side of the November elections to secure the midwest" farming belt.

"At the same time President Trump is running a hard China line into the elections," he added.

Meanwhile, investors digested President Donald Trump's efforts to take unilateral action in the absence of a deal with Congress on emergency pandemic spending.

Trump signed four executive orders over the weekend to defer payroll taxes, impose a moratorium on evictions, and provide $400 in weekly unemployment benefits, to be partially paid by states, to replace the $600 weekly payments that expired at the end of July.

While Democrats and Republicans failed to reach a deal, some analysts say there is still a chance one will be worked out that will have Congress provide more aid.

Treasury Secretary Steven Mnuchin said Monday on CNBC that "there's a deal to do if the Democrats are reasonable and want to compromise." - Key figures around 1530 GMT - London - FTSE 100: UP 0.3 percent at 6,050.59 points (close) Frankfurt - DAX 30: UP 0.1 percent at 12,687.53 (close) Paris - CAC 40: UP 0.4 percent at 4,909.51 (close) EURO STOXX 50: UP 0.2 percent at 3,257.79 New York - Dow: UP 0.8 percent at 27,664.82 Hong Kong - Hang Seng: DOWN 0.6 percent at 24,377.43 (close) Shanghai - Composite: UP 0.8 percent at 3,379.25 (close) Tokyo - Nikkei 225: Closed for a holiday Euro/dollar: DOWN at $1.1760 from $1.1786 Friday Dollar/yen: DOWN at 105.81 yen from 105.94 yen Pound/dollar: UP at $1.3082 from $1.3057 Euro/pound: DOWN at 89.89 pence from 90.24 penceWest Texas Intermediate: UP 1.4 percent at $41.80 per barrelBrent North Sea crude: UP 1.0 percent at $44.85 a barrel