TOKYO (Reuters) – US stock futures fell and Asian stocks were under pressure early Monday due to the closure of the consulate in China and the United States, raising concerns about worsening diplomatic ties between the two largest economies. great in the world.
FILE PHOTO: A man with a protective face mask, after a coronavirus outbreak, is reflected on a screen showing stock prices outside a brokerage in Tokyo, Japan, on March 6, 2020. REUTERS / Issei Kato
S & P500 futures fell 0.2% while Nasdaq futures lost 0.3%. Japan’s Nikkei fell 1.3%, reopening after a long weekend.
MSCI’s broader index of Asia Pacific stocks outside Japan was flat.
Global actions lost steam late last week after Washington ordered the closure of China’s Chinese consulate in Houston, prompting Beijing to react in kind by closing the U.S. consulate in Chengdu.
United States Secretary of State Mike Pompeo again pointed to China last week, saying that Washington and its allies must use “more creative and assertive ways” to pressure the Chinese Communist Party to change its ways.
“The President of the United States (Donald) Trump used to say that the President of China, Xi Jinping, is a great leader. But now Pompeo’s newsroom is becoming so aggressive that markets are beginning to worry about further escalation, “said Norihiro Fujito, chief investment strategist at Mitsubishi Securities.
Hopes for a rapid economic recovery in the United States are also fading, as coronavirus infections showed little sign of slowing down.
That means the economy could capitulate without new government support, with some of the previous steps, such as improving unemployment benefits due this month.
Investors hope the US Congress will reach an agreement before its summer recess, but there are some tipping points including the size of the stimulus and the higher unemployment benefits.
United States Treasury Secretary Steve Mnuchin said the package will contain extended unemployment benefits with a 70% “wage replacement”.
Democrats, who control the House of Representatives, want the enhanced benefits of $ 600 a week to spread and are looking for a much bigger stimulus compared to the Republicans’ $ 1 trillion plan.
In addition to stimulus developments, investors are seeking corporate profits from around the world for clues to the pace of recovery in the global economy.
Concerns about the US economic outlook began to weigh on the dollar, reversing its inverse correlation with economic well-being in recent months.
The dollar index was at its lowest level in nearly two years at 94,337.
The euro changed hands to $ 1,16525 after hitting a 22-month high of $ 1,16590 as sentiment on the common currency improved after European leaders agreed on a recovery fund in a major step toward greater fiscal cooperation.
Against the yen, the dollar fell 0.2% to 105.93 yen, close to Friday’s four-month low of 105.68.
Gold rose 0.4% to $ 1,910.0 per ounce, close to its all-time high of $ 1,920.4 reached in September 2011, as tensions between China and the United States increased the attractiveness of safe-haven assets, especially those that are not linked. to any specific country.
Oil prices fell at the start of trade due to concerns about worsening relations.
Brent futures fell 0.46% to $ 43.14 per barrel, while US crude futures fell 0.44% to $ 41.11.
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