GLOBAL MARKETS-U.S.-China tension to push Asian shares lower in choppy trade

NEW YORK, May 28 (Reuters) - Asian shares were set to dip in
choppy trade on Friday as worries about worsening U.S.-China
ties offset the fillip from hopes massive government stimulus
can jump-start the world economy.
E-Mini futures for the S&P 500 ESc1 edged down 0.12% in
early Asian trade, while Nikkei futures NKc1 pointed to a loss
of 10 points. Weaker Australian stock futures YAPcm1 also
indicated a softer open.
Underscoring the ambivalence in markets, U.S. stocks slid
from a near three-month high in a late sell-off overnight, after
U.S. President Donald Trump signed an executive order that would
weaken laws protecting social media companies, and said he'd
hold a news conference about China on Friday. .N
In the latest dispute between the world's two biggest
economies, the U.S. government has signaled plans to punish
Beijing for proceeding with a national security law for Hong
Kong that critics fear would erode the city's freedoms.
All eyes are now on Friday's press conference hosted by
Trump where he will address his response to China over its
treatment of Hong Kong. It is not clear if Trump will rescind some, none, or all of
the U.S. economic privileges that Hong Kong enjoys under U.S.
law. Larry Kudlow, Trump's top economic adviser, said on
Thursday Hong Kong may now need to be treated like China on
trade and other financial matters, which could have implications
for tariffs and stock market listings. "Risk appetite quickly disappeared after President Trump
announced he would address China tomorrow at a press
conference. It didn't take much to help traders rush to exits,"
Edward Moya, a senior market analyst at currency trader Oanda,
wrote in a note.
If tensions between China and the United States intensify, a
build-up of short positions in the S&P 500 index, or bets that
the index will fall, could spark a sell-off in shares, Moya
added.
Stock markets have rebounded from lows hit in mid-March on
hopes that enormous government stimulus could help the world
economy recover more quickly than expected from the coronavirus
shutdown. Some analysts have warned, however, that such optimism
is misplaced given the extent of economic devastation.
Indeed, the latest U.S. data showed the economy may be
stabilising, but at a much lower level.
Figures released overnight showed the number of Americans
seeking jobless benefits fell for an eighth straight week last
week, but claims remained astonishingly high. In a sign investors are undecided about how much risk to
take on, prices for safe-haven gold rose, even as the U.S.
dollar and Japanese yen -- in demand when investors shy from
risk -- softened.
Spot gold XAU= was slightly firmer at $1,718.87 per ounce
from $1,712.35 seen overnight. GOL/
The dollar index =USD slipped 0.4% to 98.51, held back in
part by a stronger euro EUR= , as the common currency continued
to bask in the glow of a 750-billion-euro coronavirus recovery
fund for the European Union. USD/
The euro was firm at $1.1073 against the dollar, near a
two-month high of $1.1087, while the yen edged down 0.07% to
107.07 on the dollar.
U.S. Treasury yields were steady after inching higher
overnight as gains in stocks softened demand for bonds.
Benchmark 10-year yields held at 0.7050%.
Oil prices gave up some of their gains overnight, as
concerns that Trump could impose sanctions on China over Hong
Kong and a surprise build in inventories overshadowed a steady
improvement in U.S. refining activity. O/R
In early Friday trade, U.S. West Texas Intermediate crude
CLc1 had slipped 0.18% to $33.65.