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European Shares Set To Fall On US-China Tensions

marketopen 011519 22may20 lt

European stocks are set to open sharply lower on Friday as signs of worsening U.S.-China relations and China's decision to write a new national security law into Hong Kong's charter added to concerns over the pace of economic recovery from the coronavirus pandemic.

Republican and Democratic U.S. senators said on Thursday they would introduce legislation to impose sanctions on Chinese officials involved in enforcing proposed new security laws in Hong Kong after last year's pro-democracy unrest.

The bipartisan legislation would also impose secondary sanctions on banks that do business with entities found to violate the law guaranteeing Hong Kong's autonomy.

Members of Congress from both parties have been taking a more aggressive tone on China, which has come under the scanner for its alleged role in covering up the initial stages of the coronavirus outbreak.

In another development, the U.S. Senate passed a legislation that seeks to delist Chinese companies who don't abide by U.S. accounting laws.

China warned that it will safeguard its sovereignty, security and interests, and threatened countermeasures.

Experts say that U.S.-China tensions will likely get worse ahead of the November election.

Asian markets drifted lower, with Chinese and Hong Kong markets pacing the declines, amid coronavirus worries and simmering geopolitical tensions.

China kicked off its delayed annual parliament session today, with the government avoiding to set any specific target for economic growth in the backdrop of the coronavirus pandemic.

Elsewhere, the Bank of Japan said it would launch a new lending program to help small and medium-sized businesses affected by the coronavirus crisis.

The dollar held gains against major peers and gold steadied while oil prices fell after recent rally.

Retail sales and public sector finance reports from the U.K. are due later in the session, headlining a light day for the European economic news.

Across the Atlantic, a lack of major U.S. economic data may lead to a choppy trading session as some traders look to get a head start on the long Memorial Day weekend.

U.S. stocks fell overnight as tensions rose between America and China and investors digested weak jobless claims and existing home sales data.

The Dow Jones Industrial Average eased 0.4 percent, the tech-heavy Nasdaq Composite declined 1 percent and the S&P 500 gave up 0.8 percent.

European markets ended lower on Thursday as signs of worsening U.S.-China relations added to concerns about global economic growth.

The pan European Stoxx 600 shed 0.8 percent. The German DAX lost 1.4 percent, France's CAC 40 index dropped 1.2 percent and the U.K.'s FTSE 100 slid 0.9 percent.

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