Stocks hit by China-US tensions, jobs data, stalled stimulus talks

Markets were already in the red following a steep drop on Wall Street sparked by news that 1.4 million Americans applied for jobless benefits last week

HONG KONG (AFP) - Asian equities took a beating yesterday on rising China-US tensions while a worse-than-forecast US jobs report and stalled stimulus talks in Washington fuelled fears about the economic recovery.
The losses come at the end of another tough week for markets, which have shown signs of stuttering after a months-long rally from their March trough.

Shanghai and Hong Kong led the sell-off yesterday as relations between the world’s two superpowers took another bad turn when China ordered the closure of the US consulate in Chengdu in retaliation for America shuttering Beijing’s diplomatic mission in Houston this week.

The standoff is the latest in a string of issues including Hong Kong, coronavirus and Huawei that have plunged relations between the superpowers into crisis.

Markets were already in the red following a steep drop on Wall Street sparked by news that 1.4 million Americans applied for jobless benefits last week, the first week-on-week rise since the start of the crisis.

The figures came as several states around the country were forced to reimpose containment measures soon after reopening from lockdown, forcing some to close bars, restaurants and other businesses key to the economy.
The reversion to such measures has come as a big blow to investors who had grown optimistic that the US economy was rebounding sharply from the collapse seen earlier in the year.

“Despite the data holding to season norms, it is difficult for investors to look through the discordant sense of permanency that is getting displayed in the absolute number of folks claiming benefits,” said Stephen Innes 
of AxiCorp. “But it also confirms what we all thought, (which) is that more gloom is building on the horizon as the reintroduction of lockdown measures in the most populous US states is walking back the thesis that the economy was rebounding sharply.”

The Dow and S&P 500 both lost more than one percent and the Nasdaq, which has been hitting regular records of late, dropped more than two percent.

And Asia took up the baton, with Hong Kong tumbling 2.2 percent and Shanghai losing 3.9 percent, while Sydney, Singapore, Jakarta and Bangkok retreated more than one percent.

Mumbai eased 0.6 percent and Seoul was 0.7 percent off, while there were also losses in Taipei, Manila 
and Wellington.

London dived 1.7 percent, while Paris and Frankfurt were around two percent down despite data showing, UK retail sales soared 14 percent in June and eurozone business activity growth was the strongest in two years.
Economists suggested the weak data could spur US lawmakers to push on with fresh stimulus measures as their previous multi-trillion-dollar package comes to an end soon.

Gold - a go-to asset in times of turmoil continued its march higher, coming within spitting distance of US$ 1,900 for the first time since late 2011, boosted by uncertainty over the economic recovery, geopolitical tensions and Federal Reserve monetary easing that has weakened the dollar.