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World stocks hit Friday as China moved to impose a new security law on Hong Kong following last year’s pro-democracy unrest, further straining US-China ties which were rapidly deteriorating.
These tensions plus news that China for the first time dropped its annual growth target added to concerns about the Covid-19 pandemic ‘s impact, knocking down oil prices by more than 5 per cent, and boosting demand for safe havens such as US government bonds.
European shares have been opened significantly lower, with blue-chip indexes in London , Paris and Frankfurt all falling by more than 1.5%.
That followed a sharp selloff in Asia led by the Hang Seng index, shedding more than 5% to a low of seven weeks.
Japan’s Nikkei slipped 0.8 percent, while US stock futures dropped nearly 1 percent – pointing to a weak Wall Street opening.
More than 1 per cent dropped in Shanghai, Seoul, Taipei, Bangkok, Manila and Mumbai.
Singapore shed 2.3 percent, with Sydney 1 percent off, while Wellington fell 0.6 percent off.
The news that China has not set an economic growth target for the first time since the government started publishing such goals in 1990, while expected by markets, added to a sense that the coronavirus fallout is likely to prolong.
Brent crude fell more than 5% to US$ 34.04 a barrel, while West Texas Intermediate ( WTI) crude fell 6.8% to US$ 31.63.
Safe-haven U.S. Treasury yields fell about 4 basis points and rallied the U.S. dollar.
The yuan dipped to 7.15 per US dollar on offshore markets – its weakest in nearly three weeks.