Key Points
- Riot police in the Asian financial hub fired pepper pellets on protesters in the main business district
- The Chinese yuan also weakened to the lowest levels since early September in both onshore and offshore trade. (onshore 7.1595 per dollar)
“Macro hedge funds are covering their short positions in developed markets’ stocks as their bet on a second wave of the coronavirus and a double bottom in markets have not materialised,” said Masanari Takada, cross asset strategist at Nomura Securities. [1]
Economic data published on Tuesday showed U.S. consumer confidence nudged up in May and new home sales beat expectations.
But the China focus remains a key weight for sentiment after U.S. President Donald Trump on Tuesday said he was preparing to take action against China this week over its effort to impose national security laws on Hong Kong.
Reuters polls of more than 250 economists taken over the past few weeks showed recessions in most major economies would be deeper this year than previously predicted.[2]
“In many ways the outlook for the global economy resembles an obstacle course. In the first step, the economy falls into a big hole, starting in China in Q1, most of the rest of the world in Q2 and extending into Q3 in some emerging markets,” said Ethan Harris, head of global economics research at BofA.[2]
Almost three-quarters of economists, 69 of 94, who answered an additional question said the recovery would be either U-shaped, with a prolonged trough, or like a tick mark where the speed of the recovery is not as quick as the drop-off.[2]