WASHINGTON – Stocks traded up, down and sideways in wild Friday trading action as Wall Street awaited a 2 p.m. Trump presser on China. Traders and investors feared the worst, as the Trump administration has increasingly – and correctly – blamed the Chinese communist government for its ruinous handling of the coronavirus epic, even as that government continues to threaten its neighbors and increase its international belligerence.
Stocks drop at Friday’s opening bell, fearing anti-China retaliation
As news of the proposed Trump presser on the China situation first hit on Thursday, stocks quickly increased their downside slide dramatically. CNBC duly noted this in a report appearing on its website.
“Stocks dropped after Trump announced news conference on Thursday on fears that the president will impose new sanctions or trade barriers. Ahead of the conference, the Dow Jones Industrial Average fell to its session low, after giving up 300 points on Thursday in the hour after the news hit.
“Trade fears have risen as the U.S. and China continue feud over blame for the spreading coronavirus pandemic that tanked global markets in March and has threatened to stall progress on the Phase 1 trade deal reached earlier this year.
“Relations were strained further this week after China imposed new national security legislation on Hong Kong, defying Washington and prompting Secretary of State Mike Pompeo to report to Congress that he no longer viewed the former British colony as autonomous from the rest of China.”
Markets picked up where they’d left off on Thursday beginning with Friday’s 9:30 a.m. ET opening bell. And the selling squall only increased in intensity as the noon hour approached. At one point, the Dow sagged by some 300 points and things looked dismal. But after the President’s brief midafternoon presser, markets eased back into the green, though barely.
Quick recap of Friday’s Trump presser
The President spent his time reviewing China’s miserable performance in revealing the developing coronavirus crisis to the world. Clearly colluding with the World Health Organization (WHO), China withheld crucial information on Covid-19 until it was far too late for governments across the world to respond effectively to blunt its spread.
Trump confirmed that, after careful consideration, the US government would, after all, completely and permanently defund WHO, which will substantially cripple a rogue organization that’s abandoned its universal world health mission in favor of doing the Chinese government’s bidding.
In the same vein, while implicitly keeping the Phase I trade agreement with China alive, the President also condemned Beijing’s effective unilateral absorption of Hong Kong into its communist orbit, violating its agreement with the UK to leave the former Crown Colony’s independent structure alone for 50 years. Trump noted that the agreement still had 27 years to go.
But, as the world should have learned by now, Communist governments only observe treaties and agreements when it pleases them. The effective death of a “secure and prosperous” world trade center like Hong Kong, becomes the latest result.
As a result, the US will eliminate special policy exceptions that gave Hong Kong special economic treatment. The US also intends to terminate other advantages from “extradition to export controls.” The State Department will also take the “necessary steps” to “sanction the People’s Republic of China and Hong Kong officials directly involved in smothering Hong Kong’s freedom,” said the President.
Many Chinese companies lack transparancy, could be de-listed in US
The government, as already suggested, will also be looking into the transparency of Chinese companies currently listed on US exchanges. We can expect that at least some Chinese companies will be delisted from US exchanges as a result.
The President declared that he intended to protect workers and citizens of the US from Communist Chinese policies. Beijing acts fully prepared to turn up the heat on what many already regard as a Cold War II situation.
The President ended this brief presser without taking questions from “socially distanced” reporters seated on the White House lawn.
Almost immediately after the conference ended, stocks bounced back sharply from their earlier swan dive. Currently, as we approach the market’s 4 p.m. ET closing bell, the tech-heavy NASDAQ is up sharply, currently enjoying a 100+ point gain on the day (+1.07%). The broader-based S&P 500 is positive but close to flatline, gaining just 0.23% (+6.04 points).
Meanwhile, the Dow, which has had its difficulties lately due to questions concerning international trade, is off 78 points (-0.30%) at the moment while still fluctuating considerably. All this likely means that averages will close essentially flat for the day, save for a resurgent tech sector.
(UPDATE: Market averages closed at roughly the same level as reported above. Markets recovered roughly 4% during the trading month of May.)
A Fox video of President Trump’s Friday China presser (approximately 10 minutes’ duration) is available below.
– Headline image: YouTube video still taken from President Trump’s May 29, 2020 press conference
on the current US-China-Hong Kong situation.