Chinese stocks fell as investors weighed up US sanctions targeting China and the Trump administration’s attempts to extend economic support measures.
China’s CSI 300 benchmark of Shanghai- and Shenzhen-listed shares fell 0.8 per cent and Hong Kong’s Hang Seng dropped 1 per cent in early trading on Monday.
The declines came after US President Donald Trump on Friday imposed sanctions on 11 Chinese and Hong Kong officials in response to Beijing imposing a sweeping national security law on the semi-autonomous territory. The officials subject to sanctions include Carrie Lam, Hong Kong’s leader.
Washington on Friday also issued orders banning US companies from dealing with Tencent’s WeChat messaging app and ByteDance, the Chinese owner of popular video app TikTok.
Tencent fell another 3.2 per cent in Hong Kong after closing 5 per cent lower on Friday. Shares in Alibaba, a Chinese ecommerce group that trades in Hong Kong, dropped 2.8 per cent despite not being directly affected by the US orders.
Elsewhere in Asia on Monday, South Korea’s Kospi index added 0.9 per cent while Australia’s S&P/ASX 200 added 1.3 per cent. Markets in Japan were closed for a public holiday.
Traders were also watching manoeuvres in Washington and their implications for new US economic support measures. Mr Trump on Saturday bypassed lawmakers and signed orders aimed at cushioning the economic blow from coronavirus.
Mr Trump’s orders, which followed the collapse of talks with Democrats, provide $400 a week in payments to unemployed Americans — an amount that falls short of the $600 a week that was previously available. Democrats condemned Mr Trump’s orders as “weak and unconstitutional”.
Charles Evans, head of the Chicago Federal Reserve, on Sunday warned that “another support package is really incredibly important”.
Futures markets tipped the S&P 500 to open flat when trading begins on Wall Street later in the day. The index closed a touch higher on Friday following better-than-expected employment data that showed the US added 1.7m jobs in July.
Oil rose after Saudi Arabia’s state energy group Saudi Aramco said on Sunday that it was experiencing a “partial recovery in the energy market”, with chief executive Amin Nasser saying “the worst is likely behind us”.
Brent crude, the international benchmark, rose 0.7 per cent to $44.73 a barrel. US marker West Texas Intermediate rose 1 per cent to $41.61 a barrel.
Gold, viewed by investors as a haven during times of uncertainty, fell 0.4 per cent to $2,028.03 per troy ounce. The price of the precious metal has surged in recent weeks as fears over coronavirus outbreaks in the US prompted the dollar to weaken.