Tensions between Washington and Beijing are growing rapidly, forcing the Asia-Pacific stock markets to react more cautiously than before. In this regard, today there are practically no obvious dynamics, and the one that is present is rather negative.
The Japanese stock exchanges are closed on Thursday and Friday in observance of a holiday in the region which is Sea Day and Health and Sports Day, respectively.
China's Shanghai Composite Index dropped 0.69%. But its Hong Kong counterpart, on the contrary, began to increase by 0.42%.
The negative dynamics of the Chinese indicator is provided by a new stage of the conflict between the United States of America and China. On Thursday, the US government forced the Chinese diplomatic mission in Houston, Texas to cease its activities. There has not yet been a concrete response from China, but harsh statements on this matter appeared almost immediately. One thing is clear: the Chinese government does not intend to get away with such actions.
Meanwhile, US President Donal Trump only exacerbated the situation with his statements, in which there were frank hints that he might not limit himself to closing only one Chinese embassy in the United States. So in the near future we should expect new unfriendly actions by the American authorities.
Such a sharp cooling of the relations, already tense and inflamed by recent events, will, of course, immediately affect the stock markets, since they are very sensitive to such external factors.
South Korea's Kospi is down by 0.56%. Here, the statistics on economic growth are exerting special pressure. Thus, in the second quarter, the country's GDP fell by 3.3% compared to the previous period where it declined by 1.3%. This was evidence that the state's economy is facing a recession, which has not been observed for over seventeen years. At the same time, the preliminary data of the experts were also much better than the real ones. A decrease was expected by no less than 2.3%. The country's exports and imports also suffered: the former declined by 16.6%, which was the maximum decline in the last almost sixty years, the latter showed a smaller decline with 7.4%. Of course, such news could not but worsen investor sentiment.
The Australian S & P / ASX 200 index rose slightly by 0.3%. However, not very comforting data on the country's budget came. It is estimated that the budget deficit could become much larger and reach 184.5 billion aussie or 131.78 billion US dollar, already during the current fiscal year. Recall that the previous figure was also in the negative zone, and its decline was at the level of $ 85.8 billion.
Sentiments on US stock exchanges are much more positive. Wednesday's trading reflected an increase in major indicators. The reason for the positive was the country's internal news about a large government procurement, which is still in the development stage of a vaccine against coronavirus infection. The amount of the deal was announced at $ 1.95 billion for 100 million doses of the drug. However, until the drug, developed jointly by the American corporation Pfizer and the German company BioNTech, receives a certificate from the US Food and Drug Administration, its mass production will not begin.
In addition, another positive news was the possible expansion of the cash incentive program by the end of the year. The GOP has come forward with a proposal to continue paying the $ 400 unemployment benefit premium until at least the end of 2020. As a reminder, this month is the due date for the payment of the previous allowances in the amount of $ 600. However, it becomes clear that one cannot do without a new portion of incentives, the only question is its size.
The bulk of the negative comes from the deteriorating foreign policy situation. In particular, the news of the closure of the Chinese Consulate in Houston was received ambiguously on the stock exchanges. Moreover, it seems that market participants do not yet take everything that happens too close to their hearts, otherwise the result of the work would be different.
According to experts, the S&P 500 stock indicator is now in its best position. It is quite capable of a sharp and significant jump up to 3500 points. This is confirmed by the previous growth, which happened since the end of March this year: the index rose by as much as 46%.
However, the S&P 500 has a more successful rival in growth. The Nasdaq indicator for the same period was able to demonstrate an upward movement of 56%; in addition, it updated its maximum values 28 times. This may mean that further growth is quite possible, and its pace may even accelerate, which is clearly not expected by market participants.
The Dow Jones Industrial Average closed on Wednesday with an increase of 0.62%, or 165.44 points, which allowed it to move to the level of 27,005.84 points.
The Standard & Poor's 500 index increased by 0.57% or 18.72 points. Its current level is within 3,276.02 points.
The Nasdaq Composite Index climbed 0.24% or 25.76 points, pushing it to 10,706.13 points.
European stock markets welcomed Thursday's trading with positive dynamics: growth was recorded in almost all directions. The reason for the good investor sentiment was the clearer signs of economic recovery in the region.
Preliminary data on German consumer confidence should reflect an increase in the next month, supported by a temporary cut in tax rates. This is, of course, an important sign of a gradual recovery from the crisis associated with the impact of the coronavirus pandemic in the world. The consumer sentiment index aimed to reduce the negative value in August to -0.3%. Note that in July this indicator should be in the region 0.9.6%. In May its value was at - 23.1%.
In addition, the indicator of business confidence in France has strengthened. According to analysts, in July it may reach 85 points, while in the first month of summer it showed a value of 78 points. While the indicator is far from the pre-crisis level of 105 points, the fact that it was able to significantly exceed the minimum value of 53 points is already a good sign.
The German DAX Index is up by 0.5%. France's CAC 40 Index climbed 0.3%. The UK FTSE Index also went up by 0.4%.