Asian stocks finished lower on Friday amid an escalation in tensions between China and USA. Hong Kong stock market slumped on news that China’s government is planning to impose new national-security laws on Hong Kong that could limit opposition activity. The National People’s Congress (NPC) Committee said: “China firmly opposes any form of interference by foreign forces or countries in Hong Kong affairs and, if necessary, will take countermeasures against such interference.” Meanwhile, The U.S. Senate vote a bill that could potentially ban some Chinese companies from listing on American stock exchanges such as Baidu and Alibaba.
U.S. Economic Data Weigh On Stocks
The risk-off sentiment enhanced after dismal economic data from the USA. U.S. initial jobless claims reported yesterday at 2438K higher from the estimate of 2400K as the COVID-19 crisis lockdown continues to impact the U.S. job market. The four-week average dipped from the previous 3616.5K to 3042K on May 15. The Continuing Jobless Claims came in at 25.073K above the expectations of 24.765K on May 8. The Manufacturing Survey from Philadelphia Fed came in at -43.1, below the forecasts of 41.5 in May. United States Manufacturing PMI registered at 39.8 topping the expectations of 38 in May. The Services PMI came in at 36.9 above the expectations of 30, while the PMI Composite rose from previous 27 to 36.4 in May.
China, for the first time, did not set a GDP growth target in 2020 because of the uncertainties due to the coronavirus outbreak.
The Bank of Japan kept interest rates unchanged at -0.1% as was widely expected by markets. The Japan National Consumer Price Index yearly reading came in at 0.1% for April, the March reading was at 0.4%. The National CPI ex-Fresh Food came in at -0.2% below the expectations of -0.1%.
Fitch rating agency revised Australia’s outlook to negative reflecting the impact of the coronavirus outbreak and affirms rating at ‘AAA’.
Nikkei 225 ended 0.80% lower at 20,388. The Hang Seng Index is 5.50% lower at 22,945. The Shanghai Composite index is 1.82% lower at 2,815. The FTSE Straits Times index in Singapore is 2.31% lower at 2,496. In Australia the ASX 200 is 0.96% lower at 5,497.
Download our Q2 Market Global Market Outlook
AUDUSD Lower As Fitch Cut Outlook to Negative
AUDUSD is 0.70% lower at 0.6518 as the pair is under selling pressure for the second day amid the rising tensions between China and USA. Above that, a conflict that started this week between Australia and China after China’s Ministry of Commerce imposed 80% tariffs on Australian barley for five years on anti-dumping grounds. The anti-dumping tariff would be 73.6%, while the anti-subsidy tariff would be 6.9%.
The Fitch rating agency cut Australia’s outlook to negative amid the coronavirus impact on the global economy.
The pair started a correction from monthly highs as the rebound from March lows stalled around the 0.66 mark. The technical outlook is neutral as the pair trades above the 100-day moving average.
On the upside, immediate support for AUDUSD stands at 0.6515 the daily low. Next support will be met at 0.6494 the 100-day moving average. A break below 0.6494 might test the 0.6406 the low from May 18.
On the other side, the first resistance for AUDUSD stands at 0.6572 the daily top. Above 0.6572, the next target will be at 0.6601 the high from yesterday’s session. Next supply zone would emerge at 0.6659 the 200-day moving average.