Stocks Drop, Bonds Rise on Hong Kong Bill Risk: Markets Wrap

(Bloomberg) -- Asian stocks and American equity futures dropped after support from the U.S. Congress for Hong Kong protesters set up the potential for further confrontation with China as investors await a trade deal. The yen and Treasuries rose.The MSCI Asia Pacific Index at one point fell the most in almost three months and S&P 500 futures slid. The biggest drop was in Hong Kong, with President Donald Trump expected to sign the bill. A recent Reuters report that a pact between the two countries may be delayed also weighed on sentiment. The moves did ease as China’s chief negotiator offered some hope, saying he was “cautiously optimistic” about reaching a phase one trade deal with the U.S.Crucial to the U.S.-China trade discussions is the deteriorating situation in Hong Kong. China has threatened to retaliate for the passage of a American bill and said supporting the protesters was a “gross” interference in Hong Kong affairs.“It is clear that this pushes the Chinese negotiation and makes it difficult, I think that’s one thing we can depend on,” David Kotok, Cumberland Advisors chairman and CIO, said on Bloomberg TV. “I don’t see a trade deal coming. I think anything we get is minor, small and a long-term relationship between the U.S. and China has been permanently injured.”Elsewhere, oil steadied after swings earlier in the week. Crude jumped on Wednesday as American crude stockpiles rose less than expected and inventories at a key storage hub shrank by the most since August.Here are some key events coming up this week:U.S. economic indicators due for release include initial jobless claims on Thursday.Bank Indonesia will probably hold policy Thursday after four consecutive cuts, according to most analysts surveyed. A minority expect a 25-basis point trim.These are the main moves in markets:StocksJapan’s Topix index slid 0.5% as of 1 p.m. in Tokyo.Hang Seng Index fell 1.6%.South Korea’s Kospi index lost 1.2%.Futures on the S&P 500 Index lost 0.2%. The underlying gauge fell 0.4% on Wednesday.The MSCI Asia Pacific Index fell 0.8%.Euro Stoxx 50 futures fell 0.6%.CurrenciesThe yen rose 0.1% to 108.52 per dollar.The offshore yuan was flat at 7.0415 per dollar.The Bloomberg Dollar Spot Index was flat.The euro bought $1.1075, little changed.BondsThe yield on 10-year Treasuries slid one basis point to 1.73%.Australia’s 10-year yield steadied at 1.08%.CommoditiesWest Texas Intermediate crude was at $56.85 a barrel after surging 3% on Wednesday.Gold was little changed at $1,471.53 an ounce.\--With assistance from Sarah Ponczek, Claire Ballentine and Kyoungwha Kim.To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net;Andreea Papuc in Sydney at apapuc1@bloomberg.netTo contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Joanna OssingerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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