Oil is cheaper because of the tension between the U.S. and China

Marco Green
May 25, 2020

Australian shares have jumped in early trade as optimistic investors focused more on the COVID-19 economic recovery, rather than concerns about rising US-China tensions.

The US equity market finished session mixed after fluctuating back and forth across the unchanged line on Friday, 22 May 2020, amid renewed tensions between the US and China as the US Senate passed a bill aiming to delist Chinese companies from American exchanges and China's plans to impose a new security legislation on Hong Kong.

Global financial markets were already struggling to deal with mammoth economic uncertainty emanating from coronavirus lockdowns, with central banks slashing interest rates and pumping in huge sums of money into banking systems.

Governments across countries have also announced heavy spending to support economic growth.

The proposed law was recently submitted for deliberation to the National People's Congress (NPC) and it aims to boost security measures and safeguard national security in the Hong Kong Special Administrative Region (HKSAR) after violent protests rocked the region for months a year ago. But optimism around an economic bounce following re-openings and stimulus is fading.

Aside from that, top US officials including the US Secretary of State Mike Pompeo alongside the US President Donald Trump himself had reiterated multiple times that the global-scale pandemic outbreak had been a result of China's mishandling of the pandemic data, while trade tensions resurfaced further on Friday after the United States' Commerce Department had added 33 Chinese institutions, organizations and businesses to a US blacklist.

The two superpowers have also clashed over Hong Kong, human rights, trade and USA support for Chinese-claimed Taiwan.

Action in currency markets was muted.

The U.S. Congress was moving forward with a bill that could prevent Chinese companies from listing on U. The euro held near a one-week trough at $1.0895.

Meanwhile, financial investors betting on a rebound in oil helped lift prices with US crude rising 27 cents, or 0.81%, to $33.52 a barrel.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent after starting higher, with China's blue-chip CSI300 index down 0.2 percent. USA oil was down by 6 cents, or 0.2 percent, at $33.19 a barrel.

Other reports by Click Lancashire

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