Wall street has closed positive (Dow Jones: -0.07%; S&P 500: + 0.48%; Nasdaq: + 1.29%) after measures announced by Donald Trump against China for its Hong Kong security law. The President has said that Washington no longer considers the former British colony a special economic territory, but at the same time has not questioned the trade agreement signed with the Asian giant at the end of last year. And the latter has pleased investors. The S&P 500 has closed at 3,044 points after climbing a 4.5% in May and is trading at 10% of its all-time high in February. And the Nasdaq already caresses its record of 9,838 points.
The President of the United States, Donald trump, has announced retaliation against China by new citizen security law passed for Hong Kong, and that in practice cuts freedoms in the former British colony, considered until now a territory with a special regime. “China has violated its promises about Hong Kong and lied to the world about the coronavirus“said the leader.
Trump has used a very harsh tone against Beijing and has reiterated his accusations that the Chinese government “has stolen” to the US for many years.
Therefore, it has announced that regulation to increase Chinese companies listed on the American stock market and that from now on Hong Kong will not be considered a special territory. Therefore, it has removed all special trade agreements with the territory.
It has also permanently suspended the US contribution to the World Health Organization and he has said that “China must tell the truth to the world”.
Internally, the riots in minneapolis The death of a black man detained by police has sparked a wave of protests across the country as the coronavirus outbreak continues. This matter has caused a new clash between Twitter and Trump, because the social network has launched a notice about one of its tweets for extolling violence.
In other markets, the West Texas oil It is up 4% to $ 35.30 and closes May with a 90% gain, the highest in its history. Besides, the ounce of gold up 1.2% to $ 1,750, while the euro 0.14% appreciates and changes to $ 1,1091.
The European currency maintains its strength after announce the European Commission a rescue fund of 750,000 million euros. Finally, the profitability of 10-year American bond falls to 0.67%.
At a strategic level, the ‘fear of missing out’ (FOMO) is a psychological pathology described as “a generalized apprehension that others might be having rewarding experiences from which one is absent.” And, right now, there are many investors who are not at all happy with missing the “rewarding experience” that those who entered with the March bump are living and accumulate revaluations of 30% on average.
So they choose to buy stocks embracing the idea that the rebound will continue, that good news will proliferate and, with that way of acting, they are in turn giving feedback to the rebound. However, running after the market leads to hasty decisions whose consequences may not be good. The risk is that instead of good news, the bad start, in that the bags take the rest they deserve and everyone who is entering now ends up caught.