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Friday, March 29, 2024

Stocks Dive After Chinese Media Warn Trump Signing Hong Kong Bill Could Kill Trade Deal

Courtesy of ZeroHedge View original post here.

A day which has already had a near-record number of “trade deal on/trade deal off” reversals just got its latest twist when not long after Hong Kong’s SCMP boosted futures to session highs when it “reported” citing an unnamed source that the US would be willing to delay the Dec 15 tariffs even if there is no trade deal, warned – again – that the pro-Hong Kong Bill passed by Congress on Wednesday, i.e., the Hong Kong Human Rights and Democracy Act, could become a major obstacle to a trade deal between the US and China, “with Beijing closely watching developments.”

While US President Donald Trump is not expected to veto the bill, which enjoys broad bipartisan support, even the symbolic aspects may carry an extra significance – with a high-profile signing ceremony likely to further anger the Chinese government.

“The Hong Kong issue has the potential to influence the process of the trade talks. China will have to respond … if Trump signs it into law,” said one person who is familiar with the trade talks.

Quoting unnamed (of course) sources again, the SCMP also said said that in a worst-case scenario, China was willing to “fight and talk alternatively”.

A separate but similar report run by China’s Xinhua News Agency warned that legislation passed by Congress on Hong Kong is a “fiasco of interfering with other nations’ internal affairs” and is a U.S. miscalculation is due to fail.

The report went on to say that ensuring “one country, two systems” in Hong Kong for the city’s prosperity and stability is in the common interest of international community.

It then cautioned that “US politicians’ acts to harm Hong Kong’s position of international center of finance, shipping and trade via legislation will also undermine other nations’ interests, including the U.S.” This too was a clear warning that China may scuttle the trade deal if the Bill is passed.

In short, nothing really new here – all of this has already been noted by China – but the algos of course are very eager to pretend some new piece of market-moving information just hit. As a result, two hours after hitting session highs, S&P futures were back to the lows, and below 3,100 once again.

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