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The equity markets were shaken Friday by a new episode of tension between the United States and China, which relegated to the background a positive indicator on economic activity in Europe.
At the close of Wall Street, the Dow Jones fell 0.68%, the Nasdaq was down 0.94% and the S&P 500 was down 0.62%.
In Europe, the Euro Stoxx 50, the benchmark index for euro zone markets, lost 1.80% despite the publication of an indicator showing the rebound in private activity in July in the euro zone.
At the end of the day, Frankfurt suffered the heaviest losses with a drop of 2.02%. Paris gave up 1.54% and London 1.41%.
Chinese stock markets also ended sharply lower. In Hong Kong, the Hang Seng Composite Index closed down 2.19%, the Shanghai Stock Exchange plunged 3.9% and the Shenzhen Stock Exchange 5%. The Tokyo Stock Exchange has been closed since Thursday due to public holidays.
“The situation has continued to deteriorate recently between the United States and China”, summarizes David Madden, analyst at CMC Markets.
Beijing on Friday ordered the closure of the United States consulate in the large city of Chengdu (southwest), three days after the American decision to close the Chinese consulate in Houston considered by Washington as “a hub of espionage” Chinese and American “intellectual property theft”.
This “escalation of tensions between China and the United States, which could have enormous negative consequences on the stock market, is worrying,” said Stephen Innes, analyst for AxiCorp.
Sino-U.S. Tensions, already fueled by trade disputes and accusations over the origin of Covid-19, had escalated in recent weeks with Beijing’s imposition of a national security law in Hong Kong .
US Secretary of State Mike Pompeo on Thursday called on “the free world” to “triumph” over the “new tyranny” embodied, according to him, by Communist China.
The rest of the news did little to counteract this trend: the Covid-19 pandemic is still poorly controlled in the United States, while the WHO said it was “worried” on Friday about the resurgence of the disease. epidemic in several European countries.
On Thursday, a rebound in new claims for unemployment benefits in the world’s largest economy weighed on the indices.
“Faced with this deterioration in the economic situation, there is no doubt that American parliamentarians will quickly have to vote for new measures to support household incomes”, believe the experts at Aurel BGC.
At the same time, on the Old Continent, growth in private activity in the euro area increased in July, for the first time since February, even reaching its highest level in two years, according to the first estimate on Friday from the composite PMI index from the firm Markit.
The PMI activity indices in France and the United Kingdom also rose at a strong pace.
The return of risk aversion was little reflected in bond yields, however, and rates in France, Germany and Spain rose slightly.
On the value side, the technology sector has been struggling: IBM has plummeted by more than 16% on Wall Street, suffering in particular from the announcement of a new delay in the production of its latest generation processor.
In Germany, SAP lost 3.73% and Infineon 3.70%. In France, Wordline sold 4.97% and STMicroelectronics 2.71%.
Equities have benefited from the rise in gold prices this week, which are heading towards all-time highs, with the precious metal acting as a safe haven. In London, Fresnillo took 0.21%.
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