Wednesday September 4th

4-09-2019

Dow futures jump more than 200 points as Hong Kong tensions ease

U.S. stock index futures were sharply higher Wednesday as tensions in Hong Kong eased after the withdrawal of a controversial bill, easing tensions between the government and protesters. Around 8:42 a.m. ET, Dow Jones Industrial Average futures were up 226 points, indicating a gain of 225 points at the open. S&P 500 and Nasdaq 100 futures also traded higher. Hong Kong leader Carrie Lam said that she will withdraw a contentious extradition bill that has sparked months of mass protests. The Hang Seng index in Hong Kong had soared around 4% on reports overnight that the withdrawal of the bill was imminent. The bill’s withdrawal is seen as a positive because protest escalation was seen as a potential disruptor to the global economy. Some investors feared the protests could hinder U.S.-China trade talks. “While the initial response to Lam’s speech was a thumbs down, with the main dispute taken off the table things should calm down,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “The big picture issues though remain between the two and will only intensify further in coming years as we approach the 2047 handover but for now, move on.” Earlier Wednesday, a report showed growth in China’s services sector had expanded at its fastest rate in three months in August, despite broader economic headwinds. By the market close, the Hang Seng index had jumped 3.9% to 26,523.23, paring some gains after surging as high as more than 4% earlier. Mainland Chinese stocks also saw gains on the day, with the Shanghai composite rising 0.93% to about 2,957.41 while the the Shenzhen component added 0.69% to 9,700.32. The Shenzhen composite also advanced 0.667% to approximately 1,636.40. The Caixin/Markit Services Purchasing Managers’ Index (PMI) came in at 52.1 in August — its highest reading since May. The 50-mark in PMI readings separates growth and contraction. At the start of the month, the U.S. and China imposed new tariffs on one another’s goods. It marked the latest escalation in a long-running trade war between the world’s two largest economies. Wednesday’s gains come after the major indexes posted solid losses in the previous session. The Dow dropped 285 points while the Nasdaq and S&P 500 slid 1.1% and 0.7%, respectively. In Japan, the Nikkei 225 gained 0.12% to close at 20,649.14 while the Topix index shed 0.26% to end its trading day at 1,506.81. The Kospi in South Korea closed 1.16% higher at 1,988.53. In Europe, a cross-party alliance of rebel lawmakers defeated British Prime Minister Boris Johnson in parliament on Tuesday, moving to prevent him from taking the country out of the European Union without a formal agreement on October 31. It prompted the new prime minister to announce he would immediately push for a snap election. Sterling has since pared some of its recent losses against the U.S. dollar. The U.K. currency edged up 0.2% to climb above $1.21 Wednesday, after falling to its lowest level since October 2016 in the previous session. Oil prices rose on Wednesday, boosted by a wider market pickup on positive news from China’s services sector, after three days of losses on lingering fears about a weakening global economy. Brent crude was up 1.39%, at $59.07 a barrel, while U.S. West Texas Intermediate futures gained 1.56%, at $54.78 a barrel. Gold eased on Wednesday as traders locked in gains after a 1% rise in the previous session, but prices stayed near multi-year highs on heightened fears of a global recession, as well as uncertainties around the Sino-U.S. trade spat and Brexit. Spot gold fell 0.6% to $1,537.20 per ounce at 0728 GMT, but hovered near last week’s $1,554.56, its highest since April 2013. U.S. gold futures were also down 0.6% at $1,546.6 an ounce.