FTSE 100: European and Asian stock markets fall as China faces sanctions

Hong Kong Financial Markets (Copyright 2021 The Associated Press. All rights reserved.)

Hong Kong Financial Markets (Copyright 2021 The Associated Press. All rights reserved.)

European stock markets opened lower on Tuesday following falls Asian markets after the EU, UK, US and Canada announced sanctions against four Chinese officials accused of abusing ethnic minorities.

In early trading, the FTSE 100 lost 0.5 per cent to 6,690.61 before recovering to trade a quarter of a per cent down.

Germany’s DAX shed 0.7 per cent to 14,558.96 while the CAC 40 in Paris retreated 0.5 per cent to 5,938.03. On Wall Street, the S&P gained 0.7 per cent in Monday’s session, boosted by high-growth tech stocks.

Technology firms including Tesla, Microsoft and Apple have seen their share prices soar during the pandemic. However, the highly priced companies are seen as vulnerable to a rise in interest rates.

S&P futures – bets on which way the index of shares will move – dipped 0.4 per cent on Tuesday. Futures for the other closely watched index of US shares, the Dow Jones Industrial Average, were down 0.3 per cent.

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Fed Chairman Jerome Powell said while the economy was improving, a recovery is “far from complete.” In testimony to Congress, he said the Fed “will continue to provide the economy the support it needs for as long as it takes.”

Mr Powell “kept markets happy” by saying “there was still a long way to go” before tighter monetary policy is justified, Robert Carnell of ING said in a report.

In Asia on Tuesday, the Shanghai Composite Index lost 0.9% to 3,411.51 after the United States, UK and EU imposed joint sanctions on four Chinese officials over the treatment of Uighur Muslims.

Beijing retaliated by saying it would impose unspecified penalties on four European legislators, a German researcher, a think tank and other entities.

The Nikkei 225 in Tokyo lost 0.6 per cent to 28,995.92. The Hang Seng in Hong Kong fell 1.4 per cent to 28,494.09. Chinese search engine operator Baidu closed unchanged on its first trading day after the company joined the Hong Kong exchange and raised $ 3.1 billion in a share sale.

The Kospi in Seoul shed 1 per cent to 3,004.74 while Sydney’s S&P-ASX 200 lost 0.1 per cent to 6,745.40.

India’s Sensex gained 0.4 per cent to 49,977.22. New Zealand and Singapore advanced while Jakarta declined.

Additional reporting by AP