Stocks fall, bonds rise on Hong Kong unrest

Mon Sep 29, 2014 4:37pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Global equity markets fell on Monday as civil unrest in Hong Kong weighed on investor sentiment, while U.S. Treasury debt prices rose over uncertainty sparked by the protests.

Stocks on Wall Street opened sharply lower following declines in Europe and Asia as Hong Kong democracy protesters defied volleys of tear gas and police baton charges in one of the biggest political challenges for China since the Tiananmen Square crackdown 25 years ago.

Shares of companies exposed to Hong Kong fell, including HSBC (HSBA.L: Quote) and luxury goods group Richemont CFR.VX. HSBC closed down 2.3 percent and Richemont fell 1.7 percent.

Emerging markets took a hit. MSCI's emerging markets index .MSCIEF fell 1.45 percent, with Brazilian shares a big drag.

The Brazilian real fell to an almost six-year low and the benchmark Bovespa index .BVSP notched its biggest one-day drop in more than three years after a poll showed President Dilma Rousseff gaining on challenger Marina Silva ahead of Sunday's election. The Bovespa fell 4.5 percent.

Losses on Wall Street were initially broad, with all 10 of the S&P 500's sectors lower as equity investors shrugged off the latest data showing a stronger U.S. economy. Stocks later pared losses, and utilities, seen as a defensive play, rebounded.

The sell-off in U.S. stocks was overdone and exacerbated by the absence of any news of consequence to the market, said Donald Selkin, chief market strategist at National Securities in New York.

"The problem is we're not going to get any upside motivations here until the start of third-quarter earnings season next week," said Selkin, adding that Friday's jobs report will be the next major event for investors.   Continued...

Traders work on the floor of the New York Stock Exchange shortly after the opening bell September 29, 2014. REUTERS/Lucas Jackson