GENEVA — Equities kicked off the week on a mixed note amid investors, who are increasingly worried with mounting US-China tensions and rising unrest in Hong Kong, remained somewhat optimistic regarding the reopening of businesses across the globe and hope for more monetary and fiscal stimulus. But developments on the US-China leg aren’t promising. Chinese Foreign Minister Wang Yi warned that the US is heading towards a new ‘cold war’. Although China remains committed to deliver on its phase-one deal promises for now, the next round of negotiations with the US will certainly be overshadowed by the renewed political tensions, topped with Hong Kong revolts and the US blames on China having created the virus in a Wuhan lab. Stocks in Tokyo (+1.42%) rallied on government’s plans to spend additional 100 trillion yen to combat the virus-led economic slowdown. The ASX 200 (+1.55%) gained, as Shanghai’s Composite (-0.03%) traded flat and Hang Seng (-1.00%) extended Friday’s sharp losses after protesters hit the streets during the weekend in a largest anti-China manifestation since the beginning of the coronavirus outbreak. US futures traded slightly positive, and the MSCI HK should remain resilient faced with the mounting political pressures in Hong Kong as a result of a significantly weakened exposure to HK-driven revenue, down to 34% from 61% a decade ago according to Goldman Sachs. Elsewhere, trading volumes will remain weak today as the UK, US and Singapore are closed for bank holiday. Activity on DAX futures (+0.80%) hint at a positive start in Frankfurt. The German first quarter GDP contracted 2.2% as expected, versus -0.1% printed previously. But generally speaking, what worried investors before the COVID-19, namely the US-China trade frictions and Hong Kong protests, are back on headlines, but on top of a severely weakened world economy amid weeks of business shutdowns. While the US-China trade war hasn’t prevented most stock indices from reaching their all-time highs before the COVID-led sell-off hit the market place, the re-escalating tensions could hammer the bullish sentiment across the risk assets and continue driving capital toward safety. Gold remains bid near the $1,725 per ounce, as investors believe that the upside potential could be unlocked with a renewed landslide across global equities. Yet, anything less than a sizeable and durable risk sell-off should maintain the top-sellers in place approaching the $1,750 mark. The foreign exchange markets saw little action in the overnight trading session. The euro’s failure to beat the $1.10-offers (the 200-day moving average and solid psychological resistance) last week continues pulling the single currency lower against the greenback. The EURUSD is preparing to test 1.0880, the 50-day moving average support, on firming US dollar demand. The latest CFTC data printed a third consecutive week retreat in long EUR speculative positions, while the solid positive skew in euro positions hints that there is potential for a further euro sell-off if renewed risk-off moves rekindle a flight to the USD safety. Cable finds support near the 1.2160/1.2170 area, but there is a mounting selling pressure due to the political shenanigans in the UK. Boris Johnson, who hasn’t sacked Dominic Cummings on his long-distance travels during the coronavirus lockdown, now faces critics and even a revolt from the Tory MPs. Combined with a stronger US dollar, cable could pull out the 1.2075-support and extend losses toward the 1.20 mark. WTI crude consolidates gains near the $33 a barrel as demand picks up on global business reopening and improved economic activity. Though the US-China tensions could slow down the pace of the recovery, the improvement in basic energy demand should continue keeping the short-term trend on a positive path and give support to WTI near the $30 per barrel. — The writer is senior analyst at Swissquote Bank