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Asian shares slip as new Hong Kong tensions rise

U.S. President Donald Trump said late on Tuesday he is preparing to take action against China this week over its effort to impose national security laws on Hong Kong, but gave no further details.

Hong Kong shares led declines among major regional indexes, with Hang Seng falling 0.46%, though it kept a bit of distance from a two-month low touched on Monday. MSCI’s ex-Japan Asia-Pacific index .MIAPJ0000PUS lost 0.12%, with mainland Chinese shares .CSI300 down a similar amount. Japan’s Nikkei N225 was almost flat.

Worsening relations between the world’s two biggest economies could further hobble global business activity, which is already under intense pressure due to the coronavirus pandemic.

E-Mini futures for the S&P 500 ESc1 rose 0.4%, reclaiming the 3,000 chart level. The index had cleared 3,000 points in Wall Street overnight before pulling back, as some traders returned to the New York Stock Exchange floor for the first time in two months.

“The S&P 500 looked to be set to close above 3,000 until the late headline that the United States was considering a range of sanctions on Chinese officials and businesses should China go ahead with its legislation regarding Hong Kong,” analysts at the National Australia Bank said in a note.

“The extent of those possible sanctions is uncertain,” the analysts said. China’s plans to impose national security laws in Hong Kong have triggered the first big street unrest in the Asian financial hub since last year.

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