Stock indices fell after China had announced plans to impose a national security law on Hong Kong. Risky assets that drove the growth of global stocks are in danger of decline.
Mining companies and banks led Stoxx Europe 600 down 1.6% as contracts for three major US indices indicate Wall Street losses.
On Thursday, S&P 500 closed lower amid appearing signs that President Trump's tough stance on China would become a key element in his reelection campaign.
Beijing responded to Trump’s allegations, warning that China would protect its sovereignty, security, and interests, and threatened with countermeasures. The prospect of new riots in Hong Kong in response to extensive national security legislation imposed by Beijing is coming amid deteriorating relations between the two largest global economies. Hong Kong's Hang Seng stock index dropped by more than 5%.
All these threaten to slow down the rally in risky assets, which drove the growth of global stocks by about 30% compared to March lows, stimulated by support measures and hopes for the quick recovery of the economy from the damage caused by the virus.
Oil is falling due to doubts regarding the successful recovery of China's economy. West Texas Intermediate is down 6.8% to $31.63 per barrel. Brent dropped 6% to $33.9.
The Bank of Japan maintained its basic rate, announcing plans for a new lending program. The Japanese yen rose 0.2% to 107.36 per the dollar. The yuan fell as the National People's Congress of China refused to set an annual economic growth target amid the uncertainty caused by the coronavirus pandemic. The USD/RUB pair is traded at ₽71.4143 today.