European stocks fall as China tightens hold on Hong Kong
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European stocks fell on Friday as investors were scared of news that China would tighten control over Hong Kong with a new security law, raising fears of further unrest and further strain on relations between Beijing and Washington.
The Stoxx Europe 600 index
SXXP
It fell 1.3% to 335.82 after falling 0.8% on Thursday. The index continues to increase by 2.2% during the week. Elsewhere, the German DAX
DAX
and French CAC 40
PX1
They fell by around 1.3% each and the FTSE 100 index
UKX,
decreased 1.7%.
The appetite for riskier assets like stocks has been suppressed at all levels, the Dow down
YM00
drop of more than 200 points and Asian stocks, led by a 5.4% drop for the Hong Kong Hang Seng
HSI
WE.
CL.1
and European benchmark crude prices fell by 7% and 5% respectively.
“A controversial new security law in Hong Kong and no forecast for China’s GDP are fueling concerns over US-China relations. Hostilities between the world’s two largest economies have been cautious of during the second half of the week, “said Jasper Lawler, research manager at the London Capital Group, in a note to clients.
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China’s plans to introduce tough new security measures in the country have raised concerns about the return of protests that rocked the region last year. Investors are also concerned that China’s move would increase tensions with the United States: President Donald Trump tweeted that the United States would react “strongly” to these measures in Hong Kong.
Indeed, concerns about the coronavirus remain a problem for global markets. China’s top economic official said that no growth target would be set for 2020 and that spending would increase to help fight the virus and repair the damaged economy.
Elsewhere, retail sales in the United Kingdom registered their largest monthly decline in April, while government loans soared due to the country’s blockade to stop the spread of the new coronavirus.
Banking sector leads, with HSBC Holdings
HSBC,
HSBA,
in the spotlight on tensions in Hong Kong, these shares falling by 5%. UBS group actions
UBS
dropped more than 3%.
Luxury goods manufacturers that rely on China and Hong Kong for a significant share of sales also suffered losses. LVMH Moët Hennessy shares
MC
2% down, while Swatch Group stocks
UHR
2.7% decrease.
Burberry Group
BRBY
It resisted a weaker trend for the luxury goods sector, with stocks up almost 2%, although the company reported a significant drop in its pre-tax results for fiscal year 2020.