Trump’s announcement came after China’s National People’s Congress approved a national security bill for Hong Kong. The bill will bypass Hong Kong’s legislature, raising concerns over the longevity of Hong Kong’s “one party, two systems” principle, which allows additional freedoms mainland China does not have.
“If the HK response involves broad sanctions against individuals or entities, that would be a larger issue and not something the [market] could easily dismiss,” said Adam Crisafulli of Vital Knowledge, in a note. Stock valuations are “too high in general and leaves no room for error while investors aren’t paying enough attention to rising US-China tensions.”
China approves controversial national security bill for Hong Kong
Total initial unemployment claim over last 10 weeks
The shift in Hong Kong’s status immediately jeopardizes several aspects of the former British colony’s relationship with the United States, which has so far meant that Hong Kong has been spared punishing tariffs that are a hallmark of Trump’s trade war with Beijing.
But Trump did not provide details about precisely which steps would be taken or in what order, and a White House spokesman declined to comment when CNBC asked for additional clarification on the expected moves.
Trump also said he was ready to take action to mandate that Chinese and other foreign companies listed on U.S. financial exchanges abide by American accounting and audit standards.
Trump has not said whether he will sign the bill, which is currently making its way through Congress.
But the president did say Friday that he would instruct his “presidential working group on financial markets to study the different practices of Chinese companies listed on the U.S. financial markets, with a goal of protecting American investors.”
As tensions between the U.S. and China accelerate, some investor fears were assuaged after President Donald Trump made no mention of tariffs or sanctions during his press conference on Friday
Rising tensions between Washington and Beijing could become an increasing headwind for stocks, particularly the technology sector, which is most exposed on a revenue basis and through its supply chain.
The U.S. joined with other nations to condemn China’s new security rules for Hong Kong, which Beijing sees as an attempt to quell protesters.
The stock market’s internal rotation into beaten down names, like airlines and small caps, is expected to continue to be a theme in the week ahead as the economy continues to reopen.
The stock market has been mostly discounting unprecedented weakness in economic data, but the May employment report will still be of major interest Friday. Economists expect it to show another shocking loss of jobs, this time roughly 8.5 million after the 20.5 million lost in April. The unemployment rate is expected to jump to a staggering 19.8% from 14.7% in April, according to Refinitiv.
Trump issued the order Thursday after Twitter put a fact-check label one of his tweets criticizing mail-in election ballots. The president accused Twitter of political activism.
Twitter, Facebook and Alphabet all protested the move, which hit Twitter’s stock hardest.
Emanuel said technology’ is at risk in China since companies like Apple have large revenue exposure in addition to supply chain issues.
By ditching a formal economic growth target for this year, China's leaders are acknowledging continued global uncertainty amid the coronavirus pandemic.
But the move could also mark the beginning of the end for a key performance metric that has long undergirded policy decisions for Chinese government officials.
The world economy is likely to feel the impact as Beijing accelerates its shift away from a decadeslong fixation on achieving a specific, rapid pace of economic expansion to a focus on other goals, though at a slower growth rate. This transition will drag on China's demand for the world's services, finished goods and natural resources.
Premier Li Keqiang said in May that China would forgo this year's annual growth target. Over the course of the past two and a half decades of blistering growth -- including eight years in double digits and 6.1% last year -- the annual target for gross domestic output growth served as an explicit manifestation of the implicit bargain between Beijing and the public: acquiescence on many political and social issues in exchange for rising prosperity.
As growth has tapered off and as public demands for other improvements have grown, Chinese officials have in recent years been expected to fulfill an increasingly wide range of goals, including ensuring social stability, keeping debt in check, eliminating poverty and cleaning up the environment.
But Beijing still demanded regional officials achieve a growth benchmark, which encouraged them to prioritize certain kinds of policies: attracting investment and encouraging real-estate development and infrastructure.
Without a growth target, these officials will, for the first time in decades, be judged by criteria that don't include maximizing growth.
At least for the rest of this year, chief among those new benchmarks will be their ability to keep coronavirus infection counts at or near zero -- a demand that could require restrictions on work, travel and other activities that fuel economic growth.
As Mr. Li himself acknowledged Thursday at a press conference, referring to the tasks of spurring the economy and containing the pandemic: "I'm afraid there's a level of conflict of interest between these two goals."
When six new infections were confirmed recently at a housing complex in the city of Wuhan -- suggesting the coronavirus's possible re-emergence in the pandemic's initial epicenter -- local authorities fired the official in charge of the complex and ordered testing of the city's 11 million people.
Similarly, when several dozen cases were confirmed in China's northeast earlier in May, authorities promptly locked down the area, ordered residents to stay home and replaced officials. One of China's vice premiers hurried over from Beijing to chide local cadres for acting too slowly.
That new incentive structure -- out with the growth target, in with pandemic prevention -- portends a broader shift in the senior leadership's thinking on the centrality of economic growth.
Recently, officials in some underperforming provinces haven't been removed or appeared overly concerned after missing GDP targets for several consecutive years, notes Houze Song, a research fellow at the Chicago-based Paulson Institute's MacroPolo think tank.
"The marginalization of the GDP target seems to be a trend," Mr. Song said. Dropping it for 2020 "makes it more likely that in future years they will abandon the GDP target," he said -- for good.
Beginning with the introduction of a new unemployment survey in 2018, jobs have been a particular focus for China's stability-minded leaders, arguably outweighing the importance of the GDP figure, says Andrew Fennell, lead analyst for Hong Kong and China at Fitch Ratings.
Scrapping the GDP target this year, he said, "is a recognition of realities, but it's also a culmination of changes in the incentive structure."
China's top leader, Xi Jinping, told delegates to China's rubber-stamp legislature earlier in May that, if not for the pandemic, the annual growth target would have been around 6%. But with the pandemic, he said, according to state media reports, "some things are simply beyond our control."
"The global economy is doomed to fall into recession," Mr. Xi was quoted saying. "The focus should not be placed on the GDP growth rate."
In line with the apparent comfort with slower growth, Beijing announced a much milder stimulus effort than the large-scale fiscal and monetary packages that characterized its response to downturns in 2008 and 2015.
Economists say, given the job-creation targets and the fiscal budget deficit, Beijing is implying growth of less than 2% this year.
Of course, growth still matters. The two economic priorities Beijing is touting this year instead of a specific GDP goal -- ensuring employment and eliminating absolute poverty -- depend, to a large degree, on rising output.
"You can't achieve all those things without some level of growth," says Mr. Fennell of Fitch Ratings.
But Mr. Li, the premier, told reporters Thursday that China was less interested in a particular growth rate than in what he called "higher-quality development."
"We believe development still holds the key and is the foundation for resolving all of the problems in China today," he said.
Lawyers for Huawei Technologies Co. finance chief Meng Wanzhou told a Canadian court that the U.S. has wrongly accused her of lying to banks about the Chinese company's business ties to Iran.
A memo filed with the Supreme Court of British Columbia on Monday by Ms. Meng's lawyers said U.S. authorities made "reckless misstatements" about a presentation she made to HSBC in 2013 when Huawei was negotiating a line of credit.
The memo said her presentation to HSBC stated Huawei "conducts normal business activities in Iran" and worked with a partner, Skycom Tech, "in sales and service in Iran."
Ms. Meng's lawyers added that the alleged U.S. omission of her statements will be added to their claim that U.S. and Canadian officials have abused her legal rights when she was arrested at a Vancouver airport in December 2018.
A spokesman for the U.S. Justice Department wasn't immediately available to comment.
The U.S. is seeking to extradite Ms. Meng from Canada to the U.S. to face charges that she was part of a conspiracy to defraud financial institutions by claiming that Huawei wasn't tied to Skycom. HSBC and other banks cleared hundreds of millions of dollars in transactions that potentially violated international sanctions against Iran.
Ms. Meng, 48 years old, is the daughter of Huawei founder Ren Zhengfei. She is currently on bail and confined to the Vancouver area with an ankle monitor.
She lost an important legal battle last month when a British Columbia judge ruled the U.S. had met a key test to extradite her to the U.S.
The judge has agreed to other hearings in the coming months to consider Ms. Meng's claim that she was unlawfully searched and interrogated before her 2018 arrest at the airport. She also claims the extradition request is improperly based on political motivations at a time the U.S. is seeking the upper hand in prolonged trade and technology tensions with China.
Canada has a low legal threshold for allowing extraditions to the U.S., but cases can take years to resolve as a result of appeals and other legal motions allowed under Canadian law.
Meanwhile, Canada has been caught in the crossfire between the two superpowers. Two Canadians, Michael Kovrig and Michael Spavor, were arrested days after Ms. Meng's arrest and remain in jail in China. Canadian exports, including meat and canola have been blocked by China.
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