Global stocks bounce as investors focus on 'galactic' coronavirus stimulus and shrug off approval of China's new draconian law on Hong Kong

• Most global stocks rose on Thursday, shrugging off the approval of a new security law in Hong Kong, which many fear will allow Beijing to rule the semi-autonomous region with greater control, and could threaten its status as a global financial center.
• Instead, investors continued to focus on the easing of coronavirus lockdowns around the world, and in Europe, markets were buoyed by Wednesday's proposal of a 750 billion euro pandemic stimulus package.
• Hong Kong's Hang Seng Index was one of the only major indexes to fall on the day, losing around 0.7% by the end of trading.
• In Europe stocks saw small gains by late morning, while in Japan, the Nikkei bounced more than 2% after the passage of a new $1.1 trillion stimulus package.
• One analyst described the latest stimulus packages from Europe and Asia as being "galactic" in scale.

Most global stocks rose on Thursday with investors looking beyond the imposition of a new security law by China, and towards increased global stimulus and the gradual reopening of economies amid the coronavirus pandemic.

China's National People Congress approved a proposal on Thursday that targets subversion of state power, terrorism activities and foreign interference.

The law is largely perceived as a tightening of its grip of neighbouring Hong Kong and violating Hong Kong's "one country, two systems" policy that has been in place since 1997.

The law, first announced last week, was largely expected to be approved on Thursday.

Ahead of it's confirmation, US secretary of the state Mike Pompeo said on Wednesday it no longer considered Hong Kong an autonomous state, raising tensions between the US and China, and possibly worrying markets.

"No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground," Pompeo said.

Investors, however, hose largely to look past the imposition of the new security law, and geopolitical issues between the world's two biggest powers, focusing instead on the easing of global coronavirus lockdowns, and in Europe, on fresh stimulus proposals from the EU.

Here's the market roundup as of 12:37 p.m. London (7.37 a.m. ET):

• Asian indexes were mixed. Hong Kong's Hang Seng closed down 0.72%, Japan's Nikkei 225 was up 2.3% and the Shanghai Composite is up 0.3%.
• European equities rose. The Eurostoxx 5o rose 0.8%, the DAX rose 0.5%, and the the FTSE 100 rose 1.1%.
• Futures underlying US stocks are mixed. The Dow Jones Industrial Average is up 0.7% , the S&P 500 is up 0.3% and the Nasdaq fell around 0.3%.
• West Texas Intermediate is down 0.9%, and Brent crude is down 2%.
• The benchmark 10-year Treasury yield rose to 0.69%.
• Gold is up 0.8% to $1723.60 per ounce.

Investors pin hopes on economic stimulus

China also rejected a US demand to hold a UN Security Council meeting over the new proposed law.

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But stocks were largely unphased and focused on various stimulus packages being introduced by different countries to help economies recover from coronavirus

Hong Kong's Hang Seng index was one of a handful of global fallers.

Neil Wilson, chief market analyst at Markets.com, said: "Confidence in equity markets is strong thanks more stimulus and signs economies are reopening quicker."

Jeffrey Halley, senior market analyst, Asia-Pacific at OANDA, said: "The fallout from US Secretary of State Mike Pompeo's declaration that Hong Kong was no longer autonomous from China, appears to be limited this morning."

Halley added: "That follows another powerful overnight session by Wall Street, with the S&P 500 closing, notably, well above its 200-day moving average at 3006.00. And if nothing else, confirms the underlying momentum that still lies in favour of the global recovery trade, whether you believe in it or not."

US stocks rose on Wednesday after signs that international authorities were taking steps to boost the global economy were paying off.

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The European Commission on Wednesday proposed an $826 billion stimulus package intended to aid recovery from the coronavirus-induced recession.

Japanese markets rose buoyed by stimulus

But Japan's Nikkei 225 rose over 2% on Thursday buoyed by the country's 117 trillion yen ($1.1 trillion) stimulus package.

The stimulus package is the country's second payout since April as its tries to shore up its economy.

Halley said: "The monetary and fiscal landscape across the world suggests that galactic levels of easing and stimulus are still at the top of the agenda of governments and central banks around the world."

"In this context, it isn't so surprising that the global recovery trade seen across financial markets has acquired such powerful momentum," Halley added.

The US-China trade deal is in further jeopardy

But Naeem Aslam, chief market analyst at Avatrade, said while stocks aren't significantly reacting to China's law, the tensions pose risks further down the line.

"The geopolitical tensions have seriously anchored up, but market players are still not paying much attention to this."

"The fact is that this is a moment that we should start thinking of hedging our bets, and this is because China approving this legislation has put the US trade deal in jeopardy," Aslam said.

He expects the Chinese Yuan, Hong Kong dollar and Taiwenese dollar to remain volatile in coming days.

"The bigger question for the market is if the US is going to go ahead and put sanctions on China. A key factor to keep in mind is that China will retaliate and it will slap similar sanctions on the US and this will drag the economic growth even lower," he added.