Opening Bell: Stocks, U.S. Futures Sink On Hong Kong Unrest, Trade Concerns

 | Nov 11, 2019 07:31AM ET

  • Most Asia markets close lower after protestor shot by police in Hong Kong street confrontation

  • Trump rhetoric on trade continues to vacillate, further unsettling markets

  • Treasury market closed in U.S. for Veteran's Day holiday

    • h2 Key Events/h2

    Global stocks were sold off this morning, pressuring U.S. futures, as violence in Hong Kong erupted citywide earlier today, adding to market uncertainty already supported by doubts of a trade war resolution.

    Contracts on all four major U.S. indices—including for the Dow, S&P and NASDAQ—followed Asian and European shares lower as investors sought shelter, after a Hong Kong protestor was shot in a confrontation with local police , adding to concerns of yet another roadblock on the path to tariff de-escalation. This comes after U.S. President Donald Trump said Friday that while China would “like to have a rollback, I haven’t agreed to anything," at which time he also asserted that he wouldn’t roll back all tariffs in any case.

    h2 Global Financial Affairs/h2

    Investors kept propping up U.S. stocks to record highs last week, despite the touch-and-go on trade, suggesting markets believed a deal would eventually be reached and that they viewed the conflicting rhetoric as nothing more than a negotiation strategy. Could markets now be showing initial signs investors have become fearful that yet another trade deal is about to fizzle out?

    Over the weekend China's economic outlook continued to show signs of slowing: factory gate prices dropped for a fourth month, heightening concerns about the effect of the trade war on the world’s second largest economy. Will this cause the Asian nation to soften its stance? We’d bet against it, considering China knows Trump is under the gun on two fronts: impeachment hearings are set to begin this week, and presidential elections will commence in less than a year.

    The STOXX 600 fell as this week's trading began, dragged down by miners and banking shares. Hong Kong’s Hang Seng underperformed, (-2.62%). China’s Shanghai Composite (-1.83%) was Asia's second worst-performing major index . Both were forced to open lower, but those price differentials were meaningless from a technical perspective, as they were merely “area gaps.”