Economy

Gold Off 2-Week Low Amid US-China Tensions

Gold Off 2-Week Low Amid US-China Tensions”

US Treasury yields also retreated from gains on the European Commission's proposed stimulus plan to bolster economies ravaged by the coronavirus pandemic.

"While markets have reacted as if this is a significant moment for Europe, the sums involved are tiny in the overall scheme of things, given the scale of the economic shock, particularly since none of the money will be available immediately", said Michael Hewson, the chief market analyst at CMC Markets UK.

"European markets are maintaining their positive mindset today despite ongoing fears over an impending breakdown in relations between the U.S. and China", Mahony said. "We're not going to get back to full employment or even an unemployment rate below 10% any time this year and maybe it will take most of next year".

On Wall Street, the Dow Jones Industrial Average rose 178.04 points, or 0.71%, to 25,173.15 on rising financial and industrial stocks.

MSCI's gauge of stock performance in 49 countries surged more than 2%, as did its emerging markets index.

China's Shanghai Composite was up 0.43% while the Shenzhen Component was up 0.24%, reversing its earlier losses. Technology and healthcare have outperformed during the coronavirus-led market slump.

The S&P 500 had closed above 3,000 for the first time in nearly 12 weeks, bolstered by bank stocks, as investors hoped that the world economy can recover as it re-opens. But analysts say the recovery fund proposals, if they can win over European Union members sceptical of an earlier Franco-German plan, could push the euro higher.

USD/CHF: The dollar strengthened against the Swiss franc on Wednesday as worries about the USA response to China's proposed security law for Hong Kong injected a more cautious tone into foreign exchange markets.

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"Despite fears of the implications for Hong Kong in the event that the controversial Chinese security bill is passed, markets are understandably aware of the potential consequences for US-China relations", Mahony added. Concerns about the US-China standoff over Hong Kong kept a dampener on market hopes for economic recovery. The Japanese yen strengthened 0.15% versus the greenback at 107.56 per dollar.

Brent crude fell 47 cents, or 1.3%, to $35.70 a barrel by 1106 GMT and U.S. West Texas Intermediate (WTI) crude CLc1 was down 32 cents, or nearly 1%, at $34.03.

Asian shares slipped as political unrest in Hong Kong rekindled concerns about the disruptive protests seen a year ago.

USA crude fell 5.85% to $32.34 per barrel and Brent crude was at $34.40, down 4.89% on the day.

The dollar, measured against a basket of currencies, edged down 0.2 per cent to 98.788.

Uncertainty over Hong Kong's future dragged the yuan in offshore trade to a record low of 7.1966 per dollar.

Spot gold was down 0.2 per cent to $1,707.85 per ounce by 0742 GMT, after hitting its lowest level since May 13 at $1,703 earlier in the session.



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