US weighs sanctions on Chinese officials, firms over Hong Kong – Bloomberg

Ross J Burland FXStreet

Bloomberg reports that "the Trump administration is considering a range of sanctions on Chinese officials, businesses and financial institutions over Beijing’s effort to crack down on Hong Kong, according to people familiar with the matter."

The news has weighed on equities in the late part of the day. This is a developing story by Bloomberg News, buy it has started as follows:

Lead paragraphs

The Treasury Department could impose controls on transactions and freeze assets of Chinese officials and businesses for implementing a new national security law that would curtail the rights and freedoms of Hong Kong citizens.

Inter-agency discussions are ongoing and no decision has been made on whether or how to employ the sanctions, said the people, who spoke on condition of anonymity because the moves are still under consideration.

Market implications

The S&P index opened above 3000 and above its 200-day moving average on Tuesday but this news is seeing some downside playout, with bears taking back control to lead the benchmarks back below 300. At the time of writing, the index is trading at 2,992, up 1.25% on the day, down from the highs of 3,021. As discussed, here and here, there are plenty of risks out there with the potential of spikes in new COVID-19 contagion and a war of words between the US and China.

The Hong Kong scenario is a definite risk to pay close attention to. More on that here: The Hong Kong Dollar, the next black swan?. After a meeting between Xi and military delegates at the NPC session, China president Xi Jinping has said he will step up preparedness for military combat.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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