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Stocks Tumble on China Crackdown Worries: Live Business Updates Stocks Tumble on China Crackdown Worries: Live Business Updates
(about 2 hours later)
Hong Kong stocks fell by more than 5 percent on Friday, leading other global indexes lower, after Chinese leaders announced plans to tighten their grip over the territory and to increase government spending to battle the economic impact of the coronavirus.
European markets were trading about 1 percent lower, following drops in stocks in China, Taiwan and South Korea. Futures markets were forecasting that Wall Street would open lower later on Friday.
Other markets signaled skittishness as well, as U.S. Treasury bond prices rose and oil futures fell.
The losses came amid concerns about the future of Hong Kong, a Chinese city that operates under its own laws and has its own independent judicial system. China’s announcement signaled a potential curtailment of that status and could ignite protests like the ones that roiled the city’s streets last year and sent stocks tumbling over the summer.
Hong Kong’s Hang Seng Index finished the day 5.6 percent lower, with property companies among the biggest decliners.
The sell-off also came after China announced its plans to increase government deficit spending to help combat the economic effects of the coronavirus. Officials on Friday said that Beijing would increase the deficit this year to “above 3.6 percent” to prop up the economy, and would spend another $140 billion in the stimulus effort.
While significant, that plan falls short in proportional terms of what other governments around the world have earmarked to fight the outbreak-related global economic crisis.
Chinese officials declined to set an economic growth target for this year and outlined plans to ramp up government spending, as they continue to look for ways to recover from the economic toll of the coronavirus.Chinese officials declined to set an economic growth target for this year and outlined plans to ramp up government spending, as they continue to look for ways to recover from the economic toll of the coronavirus.
In his annual report to Chinese lawmakers on Friday, Premier Li Keqiang said the country’s leaders had declined to set a target for the first time in years “because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.”In his annual report to Chinese lawmakers on Friday, Premier Li Keqiang said the country’s leaders had declined to set a target for the first time in years “because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.”
China’s economy shrank in the first three months of the year compared with a year earlier, the first decline in the modern era, after efforts to fight the outbreak froze vast parts of its industrial machine.China’s economy shrank in the first three months of the year compared with a year earlier, the first decline in the modern era, after efforts to fight the outbreak froze vast parts of its industrial machine.
China’s growth target represents a gauge of how the country’s leaders see the economy faring, and its official figures — which most economists consider to be too smooth and steady to be precisely accurate — generally meet or exceed the goal. In recent years, the targets have declined as China’s economy slowed, and it has offered a range instead of a specific figure to give policymakers more flexibility. Last year, it set a growth target of 6 percent to 6.5 percent. China’s growth target represents a gauge of how the country’s leaders see the economy faring, and its official figures — which most economists consider to be too smooth and steady to be precisely accurate — generally meet or exceed the goal. Last year, it set a target of 6 percent to 6.5 percent.
Mr. Li’s report said China would ramp up government spending by $140 billion to stir growth, plus issue a similar amount on bonds for coronavirus recovery efforts. While significant, the spending represents about 2 percent of China’s annual economic output, a smaller proportion compared with what other countries have done. Mr. Li’s report said China would ramp up government spending by $140 billion to stir growth, plus issue a similar amount on bonds for coronavirus recovery efforts. While significant, the spending represents about 2 percent of China’s annual economic output, a smaller proportion compared with what other countries have done. The country’s leaders are leery of implementing the kind of debt-fueled stimulus programs that helped the Chinese economy rebound quickly from the global financial crisis a decade ago but it burdened with debt.
Stocks on Wall Street were set for a small drop on Friday, following a turbulent day in global markets, as China’s pledges to combat the damage of the coronavirus fell short of those taken in other countries and Beijing’s efforts to tighten its grip in Hong Kong worried investors.
With China’s leaders meeting at their annual National People’s Congress, they unveiled a plan to spend another $140 billion in the stimulus effort to combat the economic effects of the coronavirus outbreak — an amount that falls short of what other countries have earmarked to fight the outbreak-related global economic crisis.
Also worrying markets was China’s plan to place Hong Kong firmly under Beijing’s control and crack down on new antigovernment protests. Shares in Hong Kong plunged more than 5 percent, and stocks in the rest of the region were lower Friday.
The move could raise tension between the United States and China, something that has been a source of concern to investors as President Trump and Republican lawmakers seek to focus blame for the coronavirus outbreak on China’s leadership as part of their re-election strategy. On Thursday, when China’s plans for Hong Kong were first announced, a number of U.S. senators proposed sanctions on Chinese officials.
It’s been a turbulent week for markets, with shares alternating between gains and losses as investors assessed new economic developments and the prospect of businesses reopening their doors to customers.
Friday’s drop in financial markets outside of Asia was relatively small.
Futures markets indicated that the S&P 500 was set for a small drop when trading begins. Stocks in Europe were less than 1 percent lower.
Crude oil fell on Friday, with West Texas Intermediate down nearly 6 percent, after climbing for six straight days. W.T.I, the U.S. crude benchmark, had climbed 26 percent during that rally.
The pandemic is producing enormous losses for business insurers worldwide: “It will be $100 billion or greater,” said Evan Greenberg, the C.E.O. of the insurer Chubb.
Speaking to editors and reporters from The Times on Thursday, Mr. Greenberg said that the pandemic had turned businesses upside down, but that it doesn’t mean every business with a policy has a valid claim.
Far from it. Business interruption insurance “is an outgrowth of a traditional fire insurance policy,” he said. Policyholders have to show that they “have direct physical damage,” and shelter-in-place orders by mayors or governors do not qualify. (Some trial lawyers and lawmakers don’t see it that way.)
Mr. Greenberg said he sympathized with struggling business owners, but the general exclusion of pandemic losses from business insurance coverage is no accident. “If you had insurance to cover the pandemic, you’d be underwriting the whole U.S. economy,” he said. “It’s impossible. With a finite balance sheet, you’d be taking on an infinite risk.”
Chubb is, however, paying some business interruption claims related to the pandemic, “and we’ll be paying many more over the next weeks and months,” he said. The payouts would be “quite visible” in the company’s next quarterly results.
Logistics — the science of making Thing A and delivering it to Point B — had become a national art form, the corporate answer to jazz, stand-up comedy and end-zone dances. The United States was like an operating system that upgraded itself so regularly that its design and endless enhancements were taken for granted.Logistics — the science of making Thing A and delivering it to Point B — had become a national art form, the corporate answer to jazz, stand-up comedy and end-zone dances. The United States was like an operating system that upgraded itself so regularly that its design and endless enhancements were taken for granted.
Now, the heart of the great American logistics machine is beating slowly and erratically, and in some places it has gone into full-on cardiac arrest, writes David Segal.Now, the heart of the great American logistics machine is beating slowly and erratically, and in some places it has gone into full-on cardiac arrest, writes David Segal.
Rationing meat. Scrambling for masks. Running low on crucial drugs. The early shortages for the pandemic — swabs, toilet paper, ventilators — were a foreshadowing, not an aberration. We still don’t have enough good tests. Our national pantry, long bursting, lacks essentials. Come to think of it, it’s also missing some nonessentials. Just try to buy a bicycle.Rationing meat. Scrambling for masks. Running low on crucial drugs. The early shortages for the pandemic — swabs, toilet paper, ventilators — were a foreshadowing, not an aberration. We still don’t have enough good tests. Our national pantry, long bursting, lacks essentials. Come to think of it, it’s also missing some nonessentials. Just try to buy a bicycle.
The country is flunking a curriculum that it basically wrote. Which is baffling. American supremacy in logistics has been a calling card for decades, even among people unfamiliar with the L-word.The country is flunking a curriculum that it basically wrote. Which is baffling. American supremacy in logistics has been a calling card for decades, even among people unfamiliar with the L-word.
Facebook will allow many of its employees to work from home permanently, Mark Zuckerberg, Facebook’s chief executive, announced during a staff meeting that was live-streamed on his Facebook page.Facebook will allow many of its employees to work from home permanently, Mark Zuckerberg, Facebook’s chief executive, announced during a staff meeting that was live-streamed on his Facebook page.
The social media giant sent its employees home in March as the coronavirus began to spread in the United States. Mr. Zuckerberg said that the temporary changes caused by the virus spurred the company to re-evaluate its requirement that employees work in a shared office. Within a decade, he said, as many as half of the company’s more than 45,000 employees would work from home.The social media giant sent its employees home in March as the coronavirus began to spread in the United States. Mr. Zuckerberg said that the temporary changes caused by the virus spurred the company to re-evaluate its requirement that employees work in a shared office. Within a decade, he said, as many as half of the company’s more than 45,000 employees would work from home.
Facebook will begin by allowing new hires who are senior engineers to work remotely, and then allow current employees to apply for permission to work from home if they have positive performance reviews.Facebook will begin by allowing new hires who are senior engineers to work remotely, and then allow current employees to apply for permission to work from home if they have positive performance reviews.
Mr. Zuckerberg’s announcement followed similar decisions at Twitter and the payments company Square, both led by Jack Dorsey. Mr. Dorsey said last week that employees at his companies would be allowed to work from home indefinitely. At Google, employees have been told they can work from home through the end of the year.Mr. Zuckerberg’s announcement followed similar decisions at Twitter and the payments company Square, both led by Jack Dorsey. Mr. Dorsey said last week that employees at his companies would be allowed to work from home indefinitely. At Google, employees have been told they can work from home through the end of the year.
Stocks on Wall Street fell on Thursday, pulling back after major benchmarks had rallied the day before.
The S&P 500 fell less than 1 percent, and global benchmarks were also lower. It’s been a turbulent week for markets, with shares alternating between gains and losses each day so far as investors assessed new economic developments and the prospect of businesses reopening their doors to customers.
On Thursday, data on jobless claims from the Labor Department showed that the surge of layoffs had reached more than 38 million in nine weeks.
But economic data from Europe provided more optimism. A monthly flood of European purchasing managers’ index reports showed business activity slowly picking up: The eurozone manufacturing index came in at 39.5 points, higher than expected and up from 33.4 last month, while the services index rose to 28.7, from 12.0 last month.
The numbers for Britain also showed an upswing: The manufacturing index reached 40.6, up from 32.6 past month, and the services sector reached 27.8, up from 13.4.
In Asia, monthly trade figures in Japan showed a nearly 22 percent fall from a year ago, underscoring the weakness of demand for the goods that the country’s factories make. Heated rhetoric in Washington against China raised the prospect that relations between the world’s two biggest economies would deteriorate further. Investors also worried about worsening tensions between China and Australia, a country that depends on Chinese demand to fuel big parts of its economy.
Lululemon, the athleisure company known for its $100 yoga pants, said that it expected to have 70 percent of its stores reopened in coming weeks with new safeguards in place. It plans to add cashless payments “where permissible” and ask staff to “state a daily health declaration before every shift.” The company, which had 491 stores worldwide as of Feb. 2, said that it has reopened 150 locations and is set to reopen 200 more during the next two weeks. The company declined to share details what constituted the health declaration or about specific openings in the United States.Lululemon, the athleisure company known for its $100 yoga pants, said that it expected to have 70 percent of its stores reopened in coming weeks with new safeguards in place. It plans to add cashless payments “where permissible” and ask staff to “state a daily health declaration before every shift.” The company, which had 491 stores worldwide as of Feb. 2, said that it has reopened 150 locations and is set to reopen 200 more during the next two weeks. The company declined to share details what constituted the health declaration or about specific openings in the United States.
Reporting was contributed by David Segal, Mohammed Hadi, Kate Conger, Sapna Maheshwari, Carlos Tejada, Daniel Victor and Kevin Granville. Reporting was contributed by David Segal, Mary Williams Walsh, Mohammed Hadi, Kate Conger, Sapna Maheshwari, Carlos Tejada, Daniel Victor and Kevin Granville.