Tech stocks drag on markets as U.S.-China relations sour

Tech stocks drag on markets as U.S.-China relations sour”

Sentiment took a hit earlier in the day after Beijing ordered Washington to close its consulate in the city of Chengdu, days after United States ordered the closure of the Chinese consulate in Houston. "That would be a problem for the US and the rest of the world as well".

"U.S. equities are in consolidation mode for a good reason. -China conflict escalating into a "Cold War" is worrying", said Hayaki Narita of Mizuho Bank.

A speech Thursday by U.S. Secretary of State Mike Pompeo saying that "securing our freedom from the Chinese Communist Party is the mission of our time" adds to the rhetoric certain to incense Beijing, making it still more hard for either side to back down, he said.

"And so, while the inevitability of deteriorating US-China relations as a structural feature of our geo-political landscape was never in doubt, the shifts appear to be hastened". China markets plunged in response, with the Shanghai Composite dropping 3.9% overnight. Hong Kong's Hang Seng Index retreated 2.2%. South Korea's Kospi edged 0.1% lower to 2,213.68.

A rally in USA stocks is losing steam this week, with an unexpected increase in jobless claims stoking worries about a stalling economy.

Republicans in the Senate were set to unveil their proposals for a $1 trillion COVID-19 rescue package Thursday morning, but that got delayed. The bellwether index is now near break-even for the year, while the NASDAQ has gained more than 15 percent year-to-date.

Investors are also concerned about a recent uptick in layoffs as spiking coronavirus counts across the Sun Belt lead more businesses to shut down.

More news: S. Korea records over 100 new COVID-19 cases, count reaches 14,092

Each index was on track for a weekly loss, with the S&P 500 and the Dow snapping three-week winning streaks and the tech-heavy Nasdaq on course for its biggest weekly decline in July.

Technology stocks had the sharpest declines after a better-than-expected profit report from Microsoft failed to satisfy investors who were expecting even more. If their shares falter after earnings, that poses a threat to the broader stock market given their outsize influence on the S&P 500. The Nasdaq composite fell 98.24 points, or 0.9%, to 10,363.18. Shares of Facebook and Apple dropped more than 4 percent and 3.8 percent, respectively.

Of the 11 major sectors in the S&P 500 on Friday, all but consumer discretionary closed in the red. The Russell 2000 index gave up 22.65 points, or 1.5%, to 1,467.55.

The yield on the 10-year Treasury was steady at 0.58%, down from 0.59% late Wednesday.

Investors had their attention focussed on Capitol Hill on Monday, with lawmakers kicking off negotiations on new stimulus measures to help the United States economy through the Covid-19 downturn.

Gold rose 0.5% to $1,900.30 per ounce, crossing above that threshold for the first time in almost nine years. It rose $24.90 to settle at $1,890.00 per ounce. Elsewhere in commodities trading, Crude oil for delivery in September rose 0.66% or 0.27 to hit $41.34 a barrel, while the September Brent oil contract rose 0.07% or 0.03 to trade at $43.34 a barrel. Brent crude, the worldwide standard, slipped 8 cents to $44.21 per barrel.

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