Introduction: Markets held back by Chinese app retaliation concerns
Good morning, and welcome to our live coverage of business, economics and financial markets.
There was some mild optimism growing in financial markets on Thursday as US politicians moved closer to agreement on the terms of another round of massive fiscal stimulus, but US President Donald Trump has put paid to that with an offensive against two prominent social media apps.
Hong Kong’s Hang Seng fell 1.8%. WeChat owner Tencent, Asia’s second-biggest company by market capitalisation, dropped as much as 10%, before recovering to a 5% fall. Mainland China’s CSI 300 Index fell 0.9% while Japan’s Nikkei slipped 0.4%. S&P 500 futures slid 0.2%.
Trump has given American companies 45 days to stop dealing with ByteDance, the Chinese owner of TikTok, and WeChat, the messaging platform owned by Tencent. His executive order said:
the spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China (China) continues to threaten the national security, foreign policy, and economy of the United States.
TikTok in particular is targeted because of its immense popularity in America, and its consequent ability to harvest personal data for China’s Communist party – although the company denies that it would ever hand data over. The Tencent ban was issued on similar grounds, causing concerns that retaliation from China against US companies could be imminent.
The FTSE 100 is expected to open flat today, but many traders’ eyes will turn towards the major economic event of the day: the US non-farm payrolls data due this afternoon in London time.
The consensus forecast of 1.58m for July would be a large drop from the 4.8m measure of how many new jobs were created in June.
Han Tan, market analyst at trading platform FXTM, said:
The July jobs figures is expected to unveil a marked slowdown in hiring compared to stunning gains seen in the prior two months, which may fuel concerns that the US recovery is losing its momentum.
Still, Thursday’s better-than-expected weekly jobless claims figure of 1.19 million, which is the lowest number of applications for US jobless benefits since March, offers hope that the US economy can continue moving into the post-pandemic era. If the jobs market can stage a sustainable recovery from here, that could spur more risk-on market activity while offering relief for the beleaguered Dollar.
- 8:30am BST: Halifax house price index (July; previous -0.1% month-on-month)
- 1:30pm BST: US non-farm payrolls (July; prev. 4.8m, consensus 1.58m)