Wall Street indexes dropped overnight as investors digested rising tensions between China and the U.S. and the latest economic data. According to the Labor Department report, another 2.4 million people filed for unemployment benefits last week, bringing the total number of filings to more than 38 million. The Dow Jones Industrial Average closed 0.4% lower, the S&P 500 fell 0.8% while the Nasdaq Composite was down 1%.
Today in Asia, stocks were on the defensive, with Hong Kong’s Hang Seng index plunging 5% after China said it is poised to impose a new national security law on Hong Kong, which fueled worries about another wave of pro-democracy protests. Elsewhere, the Nikkei 225 in Japan closed 0.8% while over in South Korea, the Kospi fell 1.41%. Overall, the MSCI Asia ex-Japan index finished 2.68% lower.
European equities started on a downbeat note as well amid concerns over tensions between the U.S. and China, and between Beijing and Hong Kong. The risk-off sentiment intensified after a report showed that the UK retail sales saw a record slump last month due to the coronavirus lockdown. The UK retail sales came in at -18.1% over the month in April versus -16% expected and -5.1% previous.
Elsewhere, the dollar regains upside momentum against high-yielding currencies amid risk aversion across the financial markets. As a result, EURUSD accelerated its pullback from the 1.10 handle and is now clinging to the 1.09 support. Once below, the common currency may challenge the 50-DMA around 1.0880. Later today, the ECB will publish its minutes of the latest meeting.
Meanwhile, bitcoin prices remain under the selling pressure after yesterday’s plunge from the $9,600 area. On Friday, BTCUSD has settled around the $9,000 handle which is the key level in the immediate term, as a break below it may attract more aggressive profit-taking following the recent rally towards $10,000.
