Global stock markets dropped yesterday as escalating protests in Hong Kong forced the closure of the financial hub’s airport, adding geopolitical worries to ongoing trade war tensions.
London, Frankfurt and Paris all slid into negative territory as news of the shutdown spread, having rallied at the open.
“Hong Kong has kind of been under the radar of most traders... but increasingly I feel like that this has the potential to spiral into a bigger market worry.
“Today’s moves highlight the risks,” said Neil Wilson, chief analyst at traders Markets.com.
All flights in and out of Hong Kong were cancelled late yesterday after thousands of pro-democracy protesters flooded into the city’s airport to denounce police violence. Authorities said more than 5,000 people descended on the Hong Kong airport yesterday carrying placards and chanting slogans about police violence, shutting the normally-busy hub.
Euro recovers versus the dollar
The abrupt shutdown came as the Chinese government signalled its rising anger at the protesters, denouncing some of the violent demonstrations as “terrorism”.
Hong Kong’s main shares index closed lower just as news of the shutdown emerged.
Hong Kong airline Cathay Pacific meanwhile yesterday warned staff that they could be fired for supporting “illegal protests”, as the firm comes under pressure from Beijing.
The carrier’s stock slumped more than four per cent after Beijing imposed new rules banning airline staff involved in the protests from flights to or over the mainland.
Taking their cue from Europe, US stock markets also opened lower, “with US-China trade tensions remaining elevated, global bond yields continuing to see pressure, while the markets await a heavy week of earnings from the retail sector and a flood of key economic reports,” said analysts at Charles Schwab.
“Moreover, the exacerbated unrest in Hong Kong is garnering attention and dampening sentiment as protests continued over the weekend,” they said.
About 15 minutes into trading, the Dow Jones Industrial Average lost 0.8 per cent to 26,083.00, and the broad-based S&P 500 dropped a similar amount to 2,895.18.
The tech-rich Nasdaq Composite Index fell 0.9 per cent to 7,890.31.
On currency markets, the euro recovered versus the dollar having suffered Friday on Italian political woes.
In Argentina, the peso plummetted 14 per cent after a crushing defeat for President Mauricio Macri in party primaries over the weekend.