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Stock Market Today: Hong Kong Lifts Dow Jones 200 Points

Hong Kong’s leader Carrie Lam announced the withdrawal of the extradition bill that prompted the protests nearly three months, a move that encouraged gains across the globe.  The Dow is currently up over 200 points.

The bill would allow Hong Kong residents to be sent to mainland China for trials. He urged huge protests that became more violent and ended the airport earlier this month.

But Lam said in Wednesday’s pre-recorded television message that the government would not accept other claims, including an independent inquiry into alleged police misconduct against protesters. However, she nominated two new members to a police surveillance agency that investigated the matter.

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Protesters also called for the release of those detained without fees, but Lam said that this was unacceptable.

The HSI Hang Seng, + 3.90%, 3.9% on Wednesday, drew the best gain from November, before the formal announcement.

In Europe SXXP, + 0.89%, especially the stocks exposed to China and Hong Kong, including HSBC HSBA Holdings, + 1.77%. Read: Europe’s stocks increase hope to end Hong Kong’s unrest

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US market-stock futures ES00, 0.30% was also buoyant.

A pro-Beijing committee of Hong Kong elites was elected to Lam as chief executive of Hong Kong, and the government of the mainland spoke in support of its government and the city’s police force during the protests.

Violence between the police and protesters has become more violent, and officials have treated bombs and gasoline rods by officials in protests last weekend. Subsequent authorities worked water guns, friction gas, rubber bullets and batteries. Over 1,100 people were detained.

The protesters of young people mostly say that there is a need for violence to get the government’s attention after the peaceful rallies are futuristic. Lam’s administration says the violence must come to an end before any dialogue begins.

In Beijing, the mainland office responsible for Hong Kong rejected the growing violence and warned that China will not “sit up” if the situation gets worse.

The protests long injured Hong Kong’s economy among delays in the Chinese economy and its trade war with the US.

The US currency today is weakening against the pound and the euro but is strengthening against the Japanese yen.

The dollar continues to be pressured after the poor US Manufacturing PMI data release. In August, it unexpectedly fell to the minimum since 2016 at 49.1 points and entered the stagnation zone, so the market is threatened by a recession in the US economy.  US business executives continue to be alarmed by the US-China trade dispute weakening production. According to observers, the latest data may indicate an impending slowdown in the industry, which may put pressure on US GDP in Q3. Against the background of recent negative data, the head of the St. Louis Federal Reserve, James Bullard, announced the need to reduce the key rate by half a percent at the next Fed meeting. According to Bullard, this decision will satisfy the expectations of the financial market and mitigate the effects of a trade war. However, the head of the Boston Federal Reserve, Eric Rosengren, expressed the opposite opinion, saying that the US economy is still strong, despite the increased risks, so a rate cut is not yet required.

Eurozone

The euro today is strengthening against the yen and the dollar, but weakening against the pound.

The European currency is growing amid positive data on the Services PMI in Germany and the Eurozone. In August, the index for Germany rose from 54.4 to 54.8 points, and for the Eurozone – from 53.4 to 53.5 points. The growth in retail sales in the Eurozone slowed weaker than the market expected, just from 2.8% to 2.2%. However, the revival of activity in the service sector can hardly indicate an improvement in the state of the European economy, since pressure on industry and exports due to the US-China trade conflict remains.

United Kingdom

The British currency is strengthening today against its main competitors – the euro, the yen, and the US dollar.

The pound is strengthened by the decision of the British Parliament to consider a bill prohibiting the government from exiting from the EU without a deal and requiring Brexit to be postponed until January 31, 2020. Voting on it should take place today and has a great chance of being positive since the Conservative Party lost its majority when Phillip Lee had joined the Liberal Democratic Party. If the bill is passed, the government threatens to call new general elections on October 14 or 15. However, they probably will not be able to strengthen the position of Boris Johnson, since the chances of a conservative majority in the parliament look doubtful in the current situation.

UK business activity index data released today turned out to be weak. In August, the indicator fell from 51.4 to 50.6 points and approached the stagnation zone.

Japan

The Japanese yen is weakening today against its main competitors – the euro, the pound, and the US dollar.

Investors are focused on the comments of Goushi Kataoka, a member of the Board of the Bank of Japan, and data on the Services PMI. Kataoka said today that the Central Bank should proactively mitigate monetary policy in order to reduce the risks of economic decline and support inflation. He also noted that regulators in other countries are increasing economic incentives, which could lead to a strengthening of the yen and a slowdown in consumer prices.

Published today, data on Japanese Services PMI in August were below market expectations. The indicator rose from 51.8 to 53.3 points (with a forecast of 53.4 points).

Australia

Today, the Australian currency is strengthening against the US dollar and the yen, weakening against the pound and has ambiguous dynamics against the euro.

The strengthening of the Australian dollar occurs despite the weak economic data. In Q2, GDP growth remained at 0.5% QoQ, while YoY it slowed down from 1.8% to 1.4%. The increase in government spending on infrastructure and the growth in iron ore exports were offset by a sharp decline in investment in housing and real estate. Australian Services PMI data also did not impress investors. In August, the indicator fell from 52.3 to 49.1 points and entered the stagnation zone.

Oil

Oil prices are growing today.

Quotes are supported by positive data on the Chinese Services PMI, which in August reached its maximum since May at around 52.1 points. Comments on the Russian energy minister, Alexander Novak, who noted that close cooperation between Russia and Saudi Arabia would continue despite changes in the leadership of the Saudi energy industry, also contributed to higher prices. In the evening, investors are waiting for the weekly API report on the US crude oil reserves. The last time they declined by 11,100 million barrels. The continuation of this trend may support prices.

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