Wall street it has been turned down and closed in red after announcing Donald Trump a press conference on China for this Friday. The market speculates with some kind of reaction against the Asian giant after a new security law for Hong Kong approved by Beijing which has been widely criticized by the US Administration. The S&P 500 had clearly passed the 3,000-point resistance and the Nasdaq it had risen to 9,500 points, very close to its all-time high. But Trump’s announcement has caused a clear downward turn in indices (the S&P has closed at 3,029).
So, on a geopolitical level, Hong Kong has refocused the eyes of the world. China on Thursday approved its security law to subdue the city in a clear show of force facing the United States. For this reason, Trump’s announcement has raised the fear of a new confrontation between both powers.
China has made a “big mistake, we can’t let this go unnoticed and they will be responsible for it“, has warned Larry kudlow, Trump’s top economic adviser.
In the economic scene, the final revision of the US GDP has shown a contraction of the 5%, slightly above the 4.8% anticipated a few weeks ago.
Although the effects of the crisis will begin to be felt even more in the second quarter of the year. The consensus anticipates a contraction that can range between 20% and 30%.
The agency Fitch Ratings has maintained its fall forecast for the United States GDP in 2020 at -5.6%. The macroeconomic stimuli have increased in the last month and the liquidity injected by central banks This is an unprecedented response, which he considers positive.
On the other hand, initial unemployment claims They have rebounded to 2.12 million, almost in line with the 2.1 million anticipated, which increases the destruction of jobs due to the pandemic to 40 million jobs.
Fitch added that “a return to economic normality is likely to be a slow and bumpy process“. The rupture of the labor market (US unemployment is expected to peak at 20% in May) and the social distancing ongoing will weigh heavily on the consumer spending after the crisis, while companies will be very cautious with the capital expenditure, he warns.
For his part, the Federal Reserve (Fed) Beige Book, a document that provides a detailed evaluation of the economy by the twelve US regional central banks with information collected before May 18, has warned that US companies are finding it difficult to resume business.
Furthermore, the April Durable Goods Orders 17.2% have plummeted, a historical drop but somewhat less than the expected drop of 19%. Excluding the item of Transportation, orders fell 7.4%, almost half the forecast 14% drop.
In other markets, the West Texas oil It is up 1.9% to $ 33.42. Besides, the ounce of gold It has advanced 0.3%, to $ 1,731, while the euro it has appreciated 0.65% and has changed to $ 1.1075. 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 rebound to 0.69%.