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Global Stocks Mostly Rise; Hong Kong Stocks Fall

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05/28/2020 | 04:01am EDT

By Frances Yoon and Joe Wallace

International stock indexes mostly rose, following U.S. markets higher on optimism over signs of an economic recovery and plans for additional stimulus, while shares fell in Hong Kong.

The Stoxx Europe 600 rose 0.6%, led by gains in telecommunication and travel-and-leisure stocks. E-mini S&P 500 futures, flipping between small gains and losses, were down 0.1%.

China's Shanghai Composite ticked up 0.3% while Hong Kong's Hang Seng fell 0.8%. The Chinese yuan weakened against the dollar.

Australia's S&P/ASX 200 added 1.2% and Japan's Nikkei 225 jumped 2.3%.

U.S. stocks surged Wednesday, reaching highs not seen since early March, as the Dow Jones Industrial Average rose 2.2%.

"We have a FOMO rally -- a fear of missing out," said Michael Drummey, head of U.S. equity risk trading at Mizuho Americas. "People are frustrated that they missed out on the rally in the past few days, and that frustration is only growing."

Mr. Drummey said investors across the globe are picking up stocks that were sold during the height of the pandemic, but continue to debate whether to buy overvalued stocks, or to invest in companies that still face challenges from a slow recovery.

However, he warned that stocks could be due for a reasonably sized pullback because of the economic uncertainties ahead.

"The market is acting in a way that doesn't really line up with that uncertainty," he said.

On Wednesday, Secretary of State Mike Pompeo said the State Department had determined Hong Kong no longer has a high degree of autonomy from China. That clears the way for President Trump to implement a range of possible measures, including revoking special arrangements on trade.

"Investors are worried about whether that means there could be new trade barriers introduced," said Chang Wei Liang, a macro strategist at DBS Bank. "We're not likely to get a solution on this immediately, so this will be lingering on investors' minds until we get clarity on what the U.S. intends to do with Hong Kong."

Mr. Chang added that the weakness in China's currency also reflected the heightened U.S.-China tensions.

In the offshore markets, the yuan weakened slightly to trade at 7.1802 to the dollar, according to FactSet. That put it close to its weakest levels since China started allowing offshore trading of the currency in 2010. Last September, the yuan depreciated beyond 7.19.

The People's Bank of China set a daily midpoint for trading of the more tightly controlled onshore yuan at 7.1277 to the dollar. That was only slightly stronger than Tuesday's fixing, which was the weakest since February 2008. The onshore yuan was trading at 7.1659 by early afternoon Shanghai time.

Paul Sandhu, head of multiasset quant solutions for Asia-Pacific at BNP Paribas Asset Management, said while trade tensions help explain the weakness in the yuan, Chinese investors' pursuit of higher returns overseas is another reason pressure is building on the currency.

Yields on the 10-year U.S. Treasury note rose to 0.685%, from 0.677% Wednesday. Bond yields rise as prices fall.

U.S. crude-oil prices fell 3.2% to $31.77 a barrel.

Write to Frances Yoon at frances.yoon@wsj.com and Joe Wallace at Joe.Wallace@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
BANK OF CHINA LIMITED -1.40% 2.81 End-of-day quote.-15.62%
BNP PARIBAS 0.29% 36.83 Real-time Quote.-30.57%
DJ INDUSTRIAL 1.44% 26075.3 Delayed Quote.-8.63%
EURO / US DOLLAR (EUR/USD) 0.06% 1.13175 Delayed Quote.0.75%
HANG SENG -2.09% 25701.81 Real-time Quote.-8.83%
LONDON BRENT OIL -0.09% 42.78 Delayed Quote.-35.88%
NASDAQ 100 0.76% 10836.333146 Delayed Quote.24.08%
NASDAQ COMP. 0.66% 10617.443394 Delayed Quote.18.33%
NIKKEI 225 2.22% 22784.74 Real-time Quote.-5.77%
RISE, INC. -3.13% 31 End-of-day quote.3.33%
S&P 500 1.05% 3185.04 Delayed Quote.-1.42%
S&P/ASX 200 0.98% 5977.5 Real-time Quote.-11.44%
S&P/CITIC 300 INDEX 2.30% 4214.29 Delayed Quote.15.99%
S&P/CITIC 50 INDEX 1.66% 4114.09 Delayed Quote.8.29%
STOXX EUROPE 600 0.83% 369.86 Delayed Quote.-11.79%
STOXX EUROPE 600 NR 0.83% 810.48 Delayed Quote.-10.43%
THE GLOBAL LTD. -3.30% 205 End-of-day quote.-56.48%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.10% 6.99981 Delayed Quote.0.70%
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) 0.13% 7.001 Delayed Quote.0.52%
WTI -0.14% 40.065 Delayed Quote.-35.40%
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