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Global stocks fall as investors brace for Trump to hit China with a ‘bazooka’


Donald Trump

Global stocks fall as investors brace for Trump to hit China with a ‘bazooka’

Reuters Global stocks turned lower on Friday as investors prepare for fresh US-China intensification ahead of President Donald Trump’s press conference on the new Hong Kong security law. Analysts said “Trump won’t look good if he has the whole world watching him, and he produces a small water pistol and not a bazooka.” Futures for…

Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020. REUTERS/Brendan McDermidReuters

  • Global stocks turned lower on Friday as investors prepare for fresh US-China intensification ahead of President Donald Trump’s press conference on the new Hong Kong security law.
  • Analysts said “Trump won’t look good if he has the whole world watching him, and he produces a small water pistol and not a bazooka.”
  • Futures for the S&P 500 dropped 0.5%, while Hong Kong’s Hang Seng index fell 0.7%.
  • Oil prices also fell ahead of Trump’s announcement. US oil benchmark WTI fell 3.5% to $32.51 a barrel, and Brent crude dropped 2.8% to $35.12.
  • Visit Business Insider’s homepage for more stories.

Global stocks fell on Friday ahead of expected developments in US-China strains as President Trump promised “interesting” action on the world’s second-largest economy. 

Investor optimism faded as China rubber-stamped its new draconian security law on Hong Kong, which sent armed police flooding the streets to tackle pro-democracy protests in the administrative region. Trump is expected to respond harshly later on Friday.  

Analysts say the market is filled with both an optimist camp and a realist camp. While one side believes Trump would not want to rattle business and needs the Chinese market, the other side feels Trump should send a clear message to Beijing over the “red lines it has crossed.”

“Trump won’t look good if he has the whole world watching him, and he produces a small water pistol and not a bazooka,” Rabobank analysts said in a note.

Read More: MORGAN STANLEY: Buy these 23 high-growth stocks that look poised to deliver market-beating returns over the long term

Oil prices dropped on news of the impending press conference. US benchmark West Texas Intermediate fell 3.3% to $32.62, and Brent Crude was down 2.8% to $35.12 a barrel.

Overnight on Thursday, S&P 500 futures erased gains of 1% and went lower by 0.2%, closing a 3-day winning streak for the Wall Street index. 

On Wednesday, the House passed an overwhelming legislation that would punish top Chinese officials for detaining more than a million Uighur Muslims in internment camps.

For that reason, Trump’s Friday announcement will be seen by investors as “a step towards escalation,” according to Connor Campbell, a financial analyst at SpreadEx.

Read More: David Herro was the world’s best international stock picker for a decade straight. He breaks down 8 stocks he bet on after the coronavirus decimated markets – and 3 he sold.

Here’s the market roundup as of 10.35 a.m. in London (5.35 a.m. ET):

  • Asian indexes were mixed with China’s Shanghai Composite up 0.2%, Hong Kong’s Hang Seng down 0.7%, and Japan’s Nikkei down 0.2%.
  • European equities fell, with Germany’s DAX down 1.6%, Britain’s FTSE 100 down 1%, and the Euro Stoxx 50 down 1.1%.
  • US stocks are set to open lower. Futures underlying the Dow Jones Industrial Average, the S&P 500, and the Nasdaq fell between 0.5% and 0.8%.
  • Oil prices fell, with West Texas Intermediate down 3.3% at $32.62, and Brent crude down 2.8% at $35.12.
  • The benchmark 10-year Treasury yield fell to 0.04%.
  • Gold rose 0.7% to $1,725 per ounce.

Read More: A part-time real-estate investor quit his traditional job 5 years after snagging his first deal. He shares his no-hassle strategy that’s allowed him to travel the world with his 6 kids.

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