By Syndication Washington Post, Bloomberg · Vildana Hajric, Claire Ballentine · BUSINESS, US-GLOBAL-MARKETS
The S&P 500 index was little changed after slumping as much as 0.5%. The benchmark index is up more than 2% on the week after surging Monday and Wednesday. Friday's drop comes as traders brace for tension between Washington and Beijing to escalate after China announced plans to impose a national security law on Hong Kong.
"In the last two days, risk appetite has subsided and equity markets are taking a bit of a breather after what's been an impressive run-up from the March 23rd lows," said Candice Bangsund, portfolio manager of global asset allocation at Fiera Capital Corp.
The Stoxx Europe 600 Index was little changed as the risk-off tone took hold earlier in Asia, where Hong Kong's benchmark stock index plunged more than 5% amid a broad selloff. The yuan dipped as China's National People's Congress abandoned its decades-long practice of setting an annual target for economic growth amid uncertainty unleashed by the coronavirus pandemic.
The prospect of fresh turmoil in Hong Kong following sweeping national security legislation introduced by China comes as the relationship between the world's two biggest economies appears to be souring. The S&P 500 closed lower on Thursday, with signs mounting that President Donald Trump will make his tough stance on China a key element of his re-election bid. Beijing responded to accusations from Trump, warning that it will safeguard its sovereignty, security and interests, and threatened countermeasures.
It all risks choking the rally that took global equities up about 30% from the March lows, spurred by stimulus measures and optimism for a swift economic recovery from the virus.
"The market is exhibiting signs of exhaustion," said Yousef Abbasi, global market strategist at INTL FCStone. "That makes sense considering how v-shaped the recovery in stocks has been."
Meanwhile, the pound weakened for a third day as data showed retail sales in the U.K. dropped by almost a fifth in April. West Texas oil plunged as much as 9.4% before trimming some losses.
Elsewhere, gold pushed higher. The Australian dollar dipped as Fitch Ratings Ltd. cut the country's rating outlook to negative. Indian bonds rallied after an unscheduled rate cut. The Bank of Japan held its main rate while saying it will start a new lending program; the yen edged higher.
- The S&P 500 Index decreased 0.2% to 2,943.01 as of 12:34 p.m. New York time.
- The Dow Jones Industrial Average dipped 0.5% to 24,357.65.
- The Nasdaq Composite Index was little changed at 9,287.83.
- The MSCI All-Country World Index declined 0.7% to 490.62.
- The Bloomberg Dollar Spot Index advanced 0.4% to 1,246.52, the largest gain in more than a week.
- The Japanese yen strengthened 0.1% to 107.53 per dollar.
- The euro declined 0.5% to $1.0889, the largest decrease in more than two weeks.
- The yield on two-year Treasuries fell less than one basis point to 0.16%.
- The yield on 10-year Treasuries dipped two basis points to 0.66%.
- Germany's 10-year yield climbed one basis point to -0.49%.
- West Texas Intermediate crude dipped 2.8% to $32.97 a barrel, the first retreat in more than a week.
- Gold strengthened 0.4% to $1,733.26 an ounce.