Global stocks were steady on Monday as investors weighed hopes for a significant stimulus package in the US, while China’s big tech groups fell for a second straight session after Washington unveiled sanctions targeting Beijing.
European stocks opened higher following a broadly positive session in Asia. London’s FTSE 100 rose 0.4 per cent at the opening bell, while the region’s other major bourses recorded similar gains. The regional benchmark Stoxx 600 index rose 0.2 per cent, bringing its gains so far in August to more than 2.2 per cent.
Traders were keeping an eye on manoeuvres in Washington and their implications for new US economic support measures. Mr Trump on Saturday bypassed lawmakers and signed executive orders aimed at cushioning the economic blow from coronavirus.
His move, which followed the collapse of talks with Democrats, provides $400 a week in payments to unemployed Americans — less than the $600 a week that was previously available. Democrats condemned Mr Trump’s orders as “weak and unconstitutional”.
Charles Evans, head of the Chicago Federal Reserve, on Sunday warned that “another support package is really incredibly important”.
“With a fairly sparse calendar this week it’s likely that markets will be taking their temperature from the state of play in Washington,” said Deutsche Bank strategist Jim Reid.
“So far we’ve shrugged off the disappointment around the lack of agreement on the next US fiscal package, however with each passing day the greater the risk is to consumer confidence and spending.”
Futures tied to the S&P 500 rose 0.1 per cent on Monday.
Shares in China’s big tech groups fell after Washington unveiled sanctions targeting Beijing, fuelling concerns over a potential broader decoupling of the world’s two biggest economies.
Tencent fell another 4 per cent in Hong Kong on Monday, adding to Friday’s 5.5 per cent loss after the Trump administration said at the end of last week that it would ban US companies from dealing with the Chinese group’s popular WeChat messaging app.
The Hong Kong-listed shares of Alibaba dropped 2.8 per cent, even though the Chinese ecommerce group was not directly affected by the US orders, which also targeted ByteDance, the owner of popular video app TikTok.
Growing concerns over rising temperatures between Beijing and Washington have scythed billions of dollars of market value from China’s fast-growing internet companies over the last two trading sessions.
US President Donald Trump on Friday imposed sanctions on 11 Chinese and Hong Kong officials in response to Beijing imposing a sweeping national security law on the semi-autonomous territory. The officials subject to sanctions include Carrie Lam, Hong Kong’s leader.
“These actions are pushing forward the China-US decoupling,” said Ken Cheung, a strategist at Mizuho Bank in Hong Kong, referring to the US sanctions.
He said investors were nervous that deepening tension could unravel the so-called phase one trade deal signed between Beijing and Washington at the start of this year, though added he did not believe the agreement was in any immediate danger.
China’s CSI 300 benchmark of Shanghai- and Shenzhen-listed shares reversed earlier losses to gain 0.4 per cent, while Hong Kong’s Hang Seng fell 0.5 per cent following the high-profile detention of media tycoon Jimmy Lai for allegedly breaching the city’s new national security law.
Elsewhere in Asia on Monday, South Korea’s Kospi index added 1.5 per cent while Australia’s S&P/ASX 200 climbed 1.9 per cent. Markets in Japan were closed for a public holiday.
Oil rose after Saudi Arabia’s state energy group Saudi Aramco said on Sunday that it was experiencing a “partial recovery in the energy market”, with chief executive Amin Nasser saying “the worst is likely behind us”.
Brent crude, the international benchmark, advanced 0.8 per cent to $44.75 a barrel.
Gold, viewed by investors as a haven during times of uncertainty, fell 0.2 per cent to $2,030 per troy ounce. The price of the precious metal has surged in recent weeks as fears over coronavirus outbreaks in the US prompted the dollar to weaken.
Investors also moved out of US government bonds, sending the yield on 10-year Treasuries to 0.5772 per cent.