Global Stocks Retreat on U.S.-China Tensions

05/29/2020 | 01:02am

By Chong Koh Ping

International stocks traded lower, as investors braced for President Trump's response to China's push for tighter security controls on Hong Kong.

By late morning in Hong Kong, the benchmark Hang Seng Index declined 0.8%. Indexes in Japan, South Korea and Shanghai slipped 0.3% or less. Australia's S&P/ASX 200 retreated 1.3%. S&P 500 futures lost 0.4%.

Colin Low, senior macro analyst at in Singapore, said investors were concerned about potential concrete actions from either the U.S. or China. He said any U.S. measures on trade or against Chinese companies, and any Chinese retaliation, could have a greater impact than previous actions taken before the new coronavirus battered both economies.

U.S. stock indexes closed lower Thursday after President Trump said he would hold a press conference about China on Friday, with the three major gauges falling between 0.2% and 0.6%.

On Thursday, China's legislature approved a resolution to impose national-security laws on Hong Kong. That sets the country on a collision course with the U.S., which has accused Beijing of reneging on its pledge to respect the city's self-governance.

Weakness in the Chinese yuan has reflected heightened tensions between the world's two largest economies. A weaker yuan could help China's economy by making its exports more competitive, but risks provoking U.S. criticism that Beijing is manipulating its currency.

The People's Bank of China set a daily midpoint for trading of the onshore yuan at 7.1316 to the dollar, fixing this level at a fresh 12-year low for the third time this week.

By late morning in Hong Kong, the less tightly controlled offshore yuan strengthened slightly to 7.1685 to the dollar, while the onshore yuan stood at 7.1522. Earlier this week, the offshore yuan, which first started trading in 2010, came close to the all-time weak levels that it hit in September.

The yield on the benchmark 10-year U.S. Treasury note fell to 0.672%, from 0.703%. Bond yields fall as prices rise.

Brent crude, the global gauge of crude-oil prices, fell 0.7% to $35.79 a barrel.

Write to Chong Koh Ping at


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