Wall Street stocks finished decently higher overnight, though off their session highs, as hopes for a recovery in business activity and a potential coronavirus vaccine lifted stocks globally. The Dow Jones Industrial Average ended up 2.17% while the S&P 500 gained 1.23%, and the Nasdaq index added 0.17%.
In Asia, stock markets were mixed on Wednesday amid the renewed U.S.-China tension over Hong Kong that dumped optimism about recovery from the coronavirus pandemic. According to the White House, a proposed national security law might jeopardize the Chinese territory’s status as a global financial center. Trump warned of sanctions on China but refrained from giving any details.
In turn, the Chinese foreign ministry reaffirmed it will take necessary countermeasures on foreign interference in Hong Kong. As for other news on this front, Trump and Pompeo are planning to discuss sanctions on Chinese officials while the EU said to weigh robust a message to China over the Hong Kong issue.
Despite the renewed concerns over the fate of the trade deal, European stocks opened higher on Wednesday with banks jumping over 2% to lead gains. In part, investor optimism persists amid expectations of a new coronavirus-related stimulus package due to be revealed by the European Commission. Meanwhile, the ECB President Christine Lagarde said that the ECB’s mild growth scenario is already outdated. She also highlighted that economic contraction likely between medium and severe scenarios but there will be no new euro debt crisis after the pandemic.
Elsewhere, the dollar regained some strength as the risk-on tone has waned. EURUSD retreated from the 1.10 barrier and came under mild selling pressure, trying to cling to the 1.0960 area during the European hours as the USD index bounced off recent lows in sub-99.00 levels. Should investors refrain from more aggressive profit-taking in the near term, the common currency will manage to hold above the 1.0950 intermediate support.