Coming off a positive May, Wall Street looks to continue its successes in June, even as relations with China sour.
MANHATTAN (CN) — Markets opened on Monday to marginal losses as U.S.-Sino tensions remained on the forefront of investors’ minds.
At the opening bell, the Dow Jones Industrial Average fell 10 points, less than a 0.5% decrease. The S&P 500 and Nasdaq had similar losses.
Tensions between the United States and China were already on the rocks over the handling of the Covid-19 pandemic, but relations got worse last week when China’s congress approved its proposal to impose new security laws banning secession and foreign interference in the territory.
The new law, the text of the which has not yet been made public, grants China broad powers in Hong Kong and threatens to end the “one country, two systems,” policy that has been in place since 1997. That policy recognized Hong Kong as part of China but allowed the city to keep its own administrative systems and capitalist economy.
In response, the White House plans to eliminate policy exemptions for Hong Kong, including extradition treaties, export controls and the use of duel-use technologies. Much to investors’ relief, however, President Trump did not mention pulling out of the trade deal with China.
Markets in Asia closed on a high note Monday, with exchanges in Hong Kong and Shanghai up 3.3% and 2.2%, respectively. Other major Asian markets gained about 1% each.
Administration officials over the weekend continued to slam China. “We’re going to look at whether we ought to go and sanction individuals who destroyed this freedom inside Hong Kong,” Secretary of State Mike Pompeo said on Fox.
China has counterpunched meanwhile, reportedly telling state-run companies to stop buying soybeans and pork from the United States. The move would further damper the already fizzling trade deal, in which China had agreed to purchase an additional $200 billion in agricultural and other products from the United States.
In a commentary posted Monday on the state-run Xinhua.net, China said President Trump had reneged on his agreement in March to “take good care” of Chinese nationals in the United States by proposing to expel Chinese students with ties to the country’s military from universities.
“More seriously, such a racist move exposes deep-seated zero-sum game mindset and Cold-War mentality of some U.S. politicians,” the commentary states. “It resembles the anti-Communism narratives in the times of McCarthyism in the late 1940s and 1950s in the United States.”
China also has taken aim at the United States for the recent anti-racism protests, with Foreign Ministry spokesperson Hua Chunying tweeting, “I can’t breathe,” in response to State Department criticisms over Hong Kong.
The number of people infected worldwide with Covid-19 has reached nearly 6.2 million, while 372,000 have died. according to data compiled by Johns Hopkins University. In the United States, about 1.8 million are confirmed to have had Covid-19, while 104,000 have died.