NEW YORK, May 30 ― A gauge of global equities rebounded and crude oil rose yesterday after US President Donald Trump ordered an end to Washington's special treatment of Hong Kong, a move investors welcomed as unlikely to jeopardise a trade accord with China.
Trump said China broke its word over Hong Kong's autonomy but did not mention any action that would undermine the Phase 1 trade deal that Washington and Beijing signed this year.
China's parliament on Thursday passed new national security legislation for the city, casting doubt on its freedoms and its future as a finance hub.
US stocks pared losses after Trump's remarks and oil gained on hopes the dispute will not curb the economy's nascent recovery from the coronavirus pandemic.
The Dow Jones Industrial Average fell 17.53 points, or 0.07 per cent, to 25,383.11, the S&P 500 gained 14.58 points, or 0.48 per cent, to 3,044.31 and the Nasdaq Composite added 120.88 points, or 1.29 per cent, to 9,489.87.
Investors were worried about a further deterioration in Sino-US relations, which have soured considerably through the Covid-19 pandemic.
“The market was worried he was going to announce something substantial, something detrimental to the US economy. Then as he spoke it became clear the actions being taken were not going to be as dramatic as originally feared,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
MSCI's gauge of stocks across the globe gained 0.05 per cent. In Europe, the pan-regional STOXX 600 index lost 1.44 per cent.
Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent. Japan's Nikkei retreated from a three-month high and the yen rose to a two-week high of 107.06 against the dollar, while bonds rose.
The Chinese yuan weakened in offshore trade.
Hong Kong's Hang Seng index declined 0.8 per cent and has lost about 3 per cent in the two weeks since news of China's security legislation broke.
The yield on benchmark 10-year US Treasury notes fell 0.651 basis points to 0.6526 per cent.
Federal Reserve Chair Jerome Powell yesterday reiterated the US central bank's promise to use its tools to mitigate economic fallout from the pandemic, even investors were turning their attention to the next phase of its response.
May rally
Massive amounts of government stimulus helped lift global stocks in May, offsetting reams of grim economic data.
Equity markets have had difficulty gauging the pandemic's impact on earnings. But data yesterday showed a record drop in US consumer spending for the second straight month and the highest-ever saving rate, reflecting high levels of economic uncertainty.
Investors have been buying stocks as lockdowns have been lifted or eased, betting on a speedy recovery.
The S&P 500 gained around 4 per cent for the month, making it the best May since 2009.
MSCI's All Country World Index, which tracks stocks across 49 countries, was up around 3.5 per cent this week ― its best weekly performance since April.
The euro climbed above its 200-day moving average for the first time since late March as the European Union's €750 billion coronavirus recovery fund fueled optimism. It was up 1.3 per cent month-to-date against the greenback, last trading at US$1.1097 (RM4.82).
The dollar index fell 0.178 per cent against a basket of currencies.
US gold futures settled up 1.4 per cent at US$1,751.70 an ounce.
US crude oil prices jumped more than 5 per cent, while Brent, the international benchmark, edged higher. US crude futures rose US$1.78 to settle at US$35.49 a barrel, while Brent settled up 4 cents at $35.33 a barrel.
Both contracts had their biggest monthly gains in years, supported by production cuts and optimism about demand recovery led by China. ― Reuters
