The US, the UK, Canada, and the EU announced sanctions against Chinese officials
Wall Street stocks closed higher on Monday, led by tech shares as investors reacted to a modest drop in bond yields that lifted the broader market sentiment. The yield on the 10-year Treasury note fell to 1.68% after trading as high as 1.74% last week. following the initial slide in global stocks, US investors shrugged off a 17%-plunge in the Turkish lira after the country’s president, Recep Tayyip Erdogan, removed the central bank head from his post on Saturday. As such, the Dow Jones Industrial Average rose 0.32%, the S&P 500 added 0.70%, and the Nasdaq Composite Index advanced 1.23%.
Today in Asia, however, stocks turned sour following early bullish attempts as the US, the UK, Canada, and the EU announced sanctions against Chinese officials for “serious human rights abuses” against Uyghur Muslims. Also on the negative side, Chinese internet-search giant Baidu made a disappointing debut in its $3 billion Hong Kong offering, as the company’s stocks rose only marginally from the opening level. As a result, Hong Kong’s Hang Seng index and China’s Shanghai Composite shed 1.34% and 0.93%, respectively. In Japan, Nikkei 225 edged 0.61% lower while South Korea’s Kospi fell 1.01%.
Following suit, European equities opened lower on Tuesday amid rising concerns over a slower economic recovery from the pandemic. Fresh lockdown in Germany and a new wave of infection in the region as a whole triggered a retreat in European indexes from one-year highs. A new round of sanctions aimed at China adding to the negative tone in the markets. Against this backdrop, the pan-European STOXX 600 index fell 0.7% in early trading.
Meanwhile, the dollar turned higher versus major counterparts in recent trading amid the prevailing risk aversion in the global financial markets. EURUSD failed to hold above the 1.1900 figure after rejection from the 1.1950 local resistance that stands on the way towards the descending 20-DMA, today at 1.1980. if the pressure persists in the short term, the pair could threaten local lows around 1.1870 that capped losses yesterday. Later today, the upside pressure surrounding the greenback could intensify if the Fed’s Powell strikes a relatively upbeat tone on the outlook for economic recovery.