Stocks sink amid rising US-China tensions

·Finance and news reporter
·2-min read
WASHINGTON, DC - JULY 14: U.S. President Donald Trump speaks to the media in the Rose Garden at the White House on July 14, 2020 in Washington, DC. President Trump spoke on several topics including Democratic presidential candidate Joe Biden, the stock market and relations with China as the coronavirus continues to spread in the U.S., with nearly 3.4 million confirmed cases. (Photo by Drew Angerer/Getty Images)
Relations between the US and China appear to have reached a new low. Photo: Drew Angerer/Getty Images

European stocks fell sharply on Friday, tracking their peers in Asia as tensions between the US and China flared over a tit-for-tat shutdown of diplomatic missions.

Beijing said on Friday that it had ordered the US to close its consulate in the southwestern city of Chengdu.

The move follows the Trump administration’s closure of the Chinese consulate in Houston, and came after a speech from US Secretary of State Mike Pompeo indicated that relations between the superpowers had reached a new low.

The pan-European STOXX 600 index (^STOXX) fell by around 1.8%, while London’s FTSE 100 (^FTSE) was almost 1.6% in the red even after much better-than-expected UK retail sales data.

READ MORE: Retail sales return to pre-pandemic levels with 13.9% surge

New figures showed that retail sales rose by 13.9% in June, bringing them more or less into line with where they were prior to the onset of the coronavirus pandemic.

Germany’s DAX (^GDAXI) was down by around 2%, while France’s CAC 40 (^FCHI) fell by around 1.7%.

“The ordering of the closure of the US’s Chengdu consulate, along with a ratcheting up of the anti-China rhetoric amongst US policymakers, has prompted further weakness as we come to the end of a week, which saw European stocks push up to their highest levels in almost five months,” said Michael Hewson, the chief market analyst at CMC Markets UK.

The declines in Europe followed steep losses in Asia overnight.

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Shanghai’s SSE Composite Index (^SSEC) fell by around 3.9% on Friday, while the Hang Seng (^HSI) closed almost 2.6% in the red in Hong Kong.

The KOSPI Composite Index (^KOSPI) in South Korea fell by 0.7%, while Australia’s ASX 200 (^AXJO) fell by more than 1.1%. Japan’s Nikkei (^N225) was closed for a public holiday.

Futures were also pointing to a lower open for US stocks on Friday.

S&P 500 futures (ES=F) fell by around 0.4%, as did Dow Jones Industrial Average futures (YM=F). Nasdaq futures (NQ=F), meanwhile, were down by around 1.1%.

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