Dow futures jumped more than 200 points as tensions in Hong Kong eased
U.S. stock index futures were sharply higher Wednesday as tensions in Hong Kong eased after the withdrawal of a controversial bill, easing tensions between the government and protesters.
Around 8:42 a.m. ET, Dow Jones Industrial Average futures were up 226 points, indicating a gain of 225 points at the open. S&P 500 and Nasdaq 100 futures also traded higher.
Hong Kong leader Carrie Lam said that she will withdraw a contentious extradition bill that has sparked months of mass protests. The Hang Seng index in Hong Kong had soared around 4% on reports overnight that the withdrawal of the bill was imminent.
The bill’s withdrawal is seen as a positive because protest escalation was seen as a potential disruptor to the global economy. Some investors feared the protests could hinder U.S.-China trade talks.
While the initial response to Lam’s speech was a thumbs down, with the main dispute taken off the table things should calm down, said Peter Boockvar, chief investment officer at Bleakley Advisory Group. He said that the big picture issues though remain between the two and will only intensify further in coming years as the 2047 handover approaches but for now, move on.
Earlier Wednesday, a report showed growth in China’s services sector had expanded at its fastest rate in three months in August, despite broader economic headwinds.
The Caixin/Markit Services Purchasing Managers’ Index (PMI) came in at 52.1 in August — its highest reading since May. The 50-mark in PMI readings separates growth and contraction.
At the start of the month, the U.S. and China imposed new tariffs on one another’s goods. It marked the latest escalation in a long-running trade war between the world’s two largest economies.
Wednesday’s gains come after the major indexes posted solid losses in the previous session. The Dow dropped 285 points while the Nasdaq and S&P 500 slid 1.1% and 0.7%, respectively.
In Europe, a cross-party alliance of rebel lawmakers defeated British Prime Minister Boris Johnson in parliament on Tuesday, moving to prevent him from taking the country out of the European Union without a formal agreement on October 31.
It prompted the new prime minister to announce he would immediately push for a snap election.
Sterling has since pared some of its recent losses against the U.S. dollar. The U.K. currency edged up 0.2% to climb above $1.21 Wednesday, after falling to its lowest level since October 2016 in the previous session.
