Us Futures Decline Amid Hong Kong Protests
Investors in the US stock market shed riskier assets in favor of safe havens over the weekend. As a result, stock futures on Monday opened significantly lower.
Monday, September 29, 2014 - 00:00
The Dow futures dropped 0.9%, the S&P 500 fell 1% and the Nasdaq declined 1.2%, according to Market Watch. Despite the downturn, there is not a constant correlation between futures’ movement and the market’s daily activity.
Market analysts exhibited unease at the back of pro-Democracy protests in Hong Kong on Monday. There is also some caution being displayed ahead of the European Central Bank policy meeting this coming Thursday and for US Commerce Department payroll data to be released on Friday.
Hong Kong sees biggest protest in over a decade
In China, trouble is brewing over Beijing’s decision to limit Hong Kong’s election process, the Wall Street Journal reported. While Beijing controls Hong Kong, the two operate under different governing systems. However, while Hong Kong citizens elect their leaders, Beijing has to approve the candidates before the vote.
As a result, Hong Kong officials had to deploy riot police armed with tear gas to keep the protest peaceful. Monday morning, schools, offices and roads were closed while the police withdrew as demonstration proved non-violent. Most of the rebellion is made up of students who represent a growing, dissatisfied population base.
The riot weakened Hong Kong’s already sluggish economy. This week is a big shopping holiday in China, and the hordes of protestors threaten to dissuade tourists. Hong Kong’s Hang Seng Index fell 1.3% at the open, and the Hong Kong dollar fell to a 6-month low.
US economy poised to sustain growth
While the Chinese markets falter, experts expect the US economy to continue its strong performance of recent months, according to Bloomberg. JP Morgan Chase economist Joseph Lupton sees the US as holding its 3% gross domestic product growth from this quarter into 2015, while Chinese expansion may decline below its target and average pace of 7.5%.
“The US is not the tail that wags the dog, but is more often than not the dog that wags the tail,” Lupton told Bloomberg. “It’s a big economy, it’s a big domestic-demand engine that drives trade flows.”
Geopolitical concerns can sway markets
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