· Asian shares defy global rally as Hong Kong unrest rattles investors
Fresh political unrest in Hong Kong over Beijing’s proposed national security laws in the city hit Asian share markets on Wednesday, even as optimism about the re-opening of the world economy supported a broader global stock rally.
Riot police in the Asian financial hub fired pepper pellets on protesters in the main business district, rekindling concerns about the disruptive protests seen last year that hit the territory’s economy.
That capped regional stocks with MSCI’s ex-Japan Asia-Pacific index .MIAPJ0000PUS losing 0.12%, as Hong Kong and mainland China shares extended declines.
Hong Kong's Hang Seng .HSI lost 1.0% while mainland shares .CSI300 were down 0.5%, amid fears the protests would worsen diplomatic and trade tensions between the United States and China.
Elsewhere, however, investors were still buoyed by optimism about a post COVID-19 recovery.
· China stocks fall on rising Sino-U.S. tensions, economic worries
China stocks fell on Wednesday as rising Sino-U.S. tensions and lingering worries over the coronavirus damage on the economy curbed risk appetite.
The blue-chip CSI300 index fell 0.7% to 3,845.61, while the Shanghai Composite Index dropped 0.3% to 2,836.80 points.
U.S. President Donald Trump said on Tuesday that he was preparing a strong response to China’s planned national security laws for Hong Kong, adding it would be announced before the end of the week.
Investors are also closely monitoring the pace of China’s economic recovery from the coronavirus crisis. Profits at the country’s industrial firms fell at a slower pace in April, but the economy faces persistent pressure as activity and demand remain weak.
· Tokyo shares hit 3-month high on speculative short-covering
Japan’s stock benchmark Nikkei rose to a three-month high on Wednesday, with financial stocks leading gains, as speculative short-covering during afternoon trade helped the index recoup losses seen earlier in the day.
The Nikkei average gained 0.7% to 21,419.23, its highest closing level since February 28.
The broader Topix added 1% to 1,549.47, its highest finish since February 27, with all but five of the 33 sector sub-indexes on the Tokyo exchange closing in positive territory.
Financial stocks notched sharply higher, with securities , insurance and banking among the best-performing sectors on the main bourse.
· Thailand reports nine new coronavirus cases, no new deaths
Thailand on Wednesday reported nine new coronavirus infections, bringing its total to 3,054 confirmed cases. There were no new deaths reported.
The cases were Thai nationals in quarantine who recently returned from overseas, including two from the United States, one from Qatar and six from Saudi Arabia, said Taweesin Wisanuyothin, a spokesman for the government’s coronavirus task force.
There are 2,931 patients who have recovered since the outbreak started. The country has recorded 57 deaths.
· European shares edge higher, focus on EU recovery plan
European shares inched higher on Wednesday as investors focused on a fresh stimulus plan for the European Union, while renewed U.S.-China tensions over Hong Kong tempered optimism about a global economic recovery.
The pan-European Stoxx 600 climbed 0.4% in early trade, with banks adding 1.5% to lead gains while health care stocks slid 0.5% lower.
European markets are following the trend set by their Asian counterparts overnight, with investors weighing the potential impact of rising tensions between Washington and Beijing, against economies reopening following coronavirus lockdowns.
· S&P 500 Forecast: Break Out or Fake Out?
The S&P 500 crossed the 3,000 mark on Tuesday, trading above the level for the first time since March 6. To be sure, the price-point possesses notable psychological significance and its failure to keep price beneath may suggest the index is headed higher still. That being said, risks to the rally remain and false breaks have occurred before.
Elsewhere, tensions between the United States and China have flared and recent developments in Hong Kong threaten to enflame the conflict further. The United States has already moved to require additional oversight of Chinese stocks listed on US exchanges, but the tit-for-tat nature of prior trade conflicts suggests China may respond with their own measures. Either way, the deteriorating relationship between the world’s two largest economies may serve to create significant uncertainty in the stock market in the weeks ahead.
Thus, while the recent price move suggests the S&P 500 is enjoying an accommodative fundamental backdrop, there are many risks at hand – each of which could easily undermine risk appetite in an instant. As the S&P 500 looks to press higher in the meantime, however, subsequent technical resistance may reside around the 3,110 level which helped stalled two recovery attempts in early March.
On the other hand, potential support may exist near 2,933 and possibly atop the descending trendline that marks the various tops and bottoms of the last month. While it is important to note the bullish implications of a higher high and a break above 3,000, it is my opinion the S&P 500 remains at significant risk of a medium-term reversal lower so the outlined support may prove crucial in the weeks ahead.
Reference: CNBC, Reuters
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