Wed, 12 Aug 2020

U.S. pounding of China rocks its stock market

Lola Evans
15 Jul 2020, 19:26 GMT+10

SYDNEY, Australia - Stocks in China tumbled on Wednesday as the United States stepped up pressure on a broad range of fronts.

Overnight British Prime Minister Boris Johnson's government banned Huawei from participating in its 5G Networks, even as a parts supplier. U.S. President Donald Trump later took credit for the decision. "I did it myself," he said in referring to pressure the U.S. has brought on a number of countries, including the UK, to isolate the world's largest telco.

Mr Trump on Tuesday also said he was not willing to talk to Beijing about a Phase 2 trade deal because China had brought on 'the plague.'

Then on Tuesday Mr Trump announced the U.S. was ending its preferential status of Hong Kong, saying it was to punish China. To top the day off the president signed a bill approved by the U.S. Congress to penalise banks doing business with Chinese officials who implemented the new security law.

The measures announced Tuesday followed Monday's announcement that the United States had rejected claims by China to offshore resources in the South China Sea. "We are making clear, Beijing's claims to offshore resources across most of the South China Sea are completely unlawful, as is its campaign of bullying to control them," U.S. Secretary of State Mike Pompeo said Monday.

"The world will not allow Beijing to treat the South China Sea as its maritime empire," he added.

With pressure mounting, China's Shanghai Composite dived 53.31 points or 1.56% to 3,361.30. The blue-chip CSI300 index was down 1.29%, with its financial sector sub-index lower by 2.26%.

The consumer staples sector was up 0.93%, the real estate index was down 2.88% while the healthcare sub-index rose 1.78%.

The smaller Shenzhen index fell 2.07%.

China was the only major country to record stock losses in Asia on Wednesday, while Hong Kong remained flat with a 3.69 points or 0.01% gain to 25,481.58.

In Japan, the Nikkei 225 jumped 358.49 points or 1.59% to 22,945.50.

The Australian All Ordinaries advanced 114.90 points or 1.90% to 6,160.40.

Surprisingly the U.S. dollar reacted badly to the build up of pressure against China, sending the euro soaring to 1.1442 by the Sydney close Wednesday.

The British pound advanced to 1.2620. The Japanese yen rose to 106.97. The Swiss franc gained to 0.9377.

The Canadian dollar strengthened to 1.3578. The Australian dollar shot above the crucial 0.70 cents level to 0.7008. The New Zealand dollar was stronger at 0.6559.

Overnight on Wall Street, the Dow Jones Industrial Average was ahead 556.79 points or 2.13% at 26,642.59.

The Standard and Poor's 500 rose 42.50 points or 1.34% to 3,197.52.

The Nasdaq Composite gained 97.73 points or 0.94% to 10,488.58.

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