European stock markets closed higher on Monday, despite the announcement of tit-for-tat Chinese sanctions on US officials and heightened tensions in Hong Kong.
China announced sanctions on 11 US officials on Monday, in response to similar sanctions levied by the US on Chinese officials last week. China’s foreign ministry said the sanctions were “on individuals who have behaved egregiously on Hong Kong-related issues,” according to the BBC. Those targeted include US senators Ted Cruz and Marco Rubio.
The sanctions announcement came hours after authorities in Hong Kong arrested prominent pro-democracy campaigner and business man Jimmy Lai under China’s widely-condemned national security law. Lai is the most prominent figure to be detained under the law so far.
Hong Kong’s Hang Seng (^HSI) dropped 0.5% but elsewhere stock markets were largely untroubled by the escalating tensions.
With little in the way of data or earnings in Europe, Michael Hewson, chief market analyst at CMC Markets, said positive momentum for stocks was largely technical.
“The rise in both equity markets, as well as gold prices, appears to be being driven by the continued rally in bond markets, which has continued to push yields lower,” Hewson said in a morning note.
Wall Street opened higher, buoyed by an executive order on stimulus from president Donald Trump over the weekend. The S&P 500 (^GSPC) was up 0.1% by the time trade ended in Europe, while the Dow Jones (^DJI) was up 0.7%. Nasdaq (^IXIC) fell 0.6%.
Overnight on mainland China, the Shanghai Composite (000001.SS) rose 0.7% and the Shenzen Component (399001.SZ) was flat. In Australia, the ASX 200 (^AXJO) rose 1.7%. Japan’s Nikkei (^N225) was closed for a holiday.