New York Governor Andrew Cuomo rings the opening bell at the New York Stock Exchange with NYSE President Stacey Cunningham in the Manhattan borough of New York on Tuesday. Reuters

The euro retreated from near two-month highs and equity markets wavered on Wednesday even as the European Union unveiled a 750 billion euro ($823 billion) recovery fund that helped offset concerns about unrest in Hong Kong over Beijing’s proposed security laws.

US Treasury yields also retreated from gains on the European Commission’s proposed stimulus plan to bolster economies ravaged by the coronavirus pandemic boosted risk appetite and reduced demand for safe-haven bonds and gold.

The commission’s plan also includes 1.1 trillion euros for the EU’s next long-term budget that would contribute to the recovery fund that is aimed especially at Italy and Spain.

News of the plan earlier underpinned a broad market rally in Europe but much of Wall Street slipped as hopes of a pick-up in business activity hit the reality of an economy that is unlikely to see full recovery until late next year.

“Market participants may be assuming a little bit more positive news than is actually going to come down the pike,” said David Kelly, chief global strategist at JPMorgan Asset Management.

“We will see a start of a recovery, but it shouldn’t be misinterpreted,” Kelly said. “We’re not going to get back to full employment or even an unemployment rate below 10% any time this year and maybe it will take most of next year.” MSCI’s gauge of stocks across the globe shed 0.19%, while the pan-European STOXX 600 index lost 0.31%.

On Wall Street, the Dow Jones Industrial Average rose 178.04 points, or 0.71%, to 25,173.15 on rising financials and industrial stocks.

But the broader S&P 500 lost 6.46 points, or 0.22%, to 2,985.31 and tech-heavy Nasdaq Composite dropped 155.04 points, or 1.66%, to 9,185.18.

Tech heavyweights Amazon.com, Microsoft Corp and Facebook Inc led the Nasdaq lower, while healthcare and technology stocks were among the S&P 500 sector indexes in the red. Technology and healthcare have outperformed during the coronavirus-led market slump.

The euro has struggled since falling in March, when investors rushed for the safety of dollars. But analysts say the recovery fund proposals, if they can win over EU members skeptical of an earlier Franco-German plan, could push the euro higher.

The dollar index rose 0.213%, with the euro down 0.05% to $1.0974. The Japanese yen weakened 0.24% versus the greenback at 107.83 per dollar.

Oil prices fell after US President Donald Trump said he was working on a strong response to China’s proposed security law in Hong Kong. Tense relations between the world’s two biggest economies could weigh on global businesses and oil demand, which already has been hit by the coronavirus pandemic.

US crude recently fell 5.85% to $32.34 per barrel and Brent was at $34.40, down 4.89% on the day.

Concerns about the US-China stand-off over Hong Kong kept a dampener on market hopes for economic recovery. Riot police fired pepper pellets on protesters in Hong Kong’s main business district, rekindling concern about the unrest seen last year that hit the territory’s economy.

MSCI’s ex-Japan Asia-Pacific index fell overnight 0.4% as Hong Kong and mainland China shares extended declines. Hong Kong’s Hang Seng fell 1.0% and mainland shares were down 0.8%, amid fears the protests would worsen antagonism between the United States and China.

The Chinese yuan weakened to the lowest levels since early September in both onshore and offshore trade. The onshore renminbi slipped 0.3 to as low as 7.1595 per dollar; the offshore currency fell 0.4% to 7.1760 per dollar.

Benchmark 10-year notes fell 3.1 basis points to yield 0.6672%.

Spot gold dropped 0.6% an ounce. (China stocks fell on Wednesday as rising Sino-US tensions and lingering worries over the coronavirus damage on the economy curbed risk appetite.

The blue-chip CSI300 index fell 0.7% to 3,845.61, while the Shanghai Composite Index dropped 0.3% to 2,836.80 points.

US President Donald Trump said on Tuesday that he was preparing a strong response to China’s planned national security laws for Hong Kong, adding it would be announced before the end of the week.

Investors are also closely monitoring the pace of China’s economic recovery from the coronavirus crisis. Profits at the country’s industrial firms fell at a slower pace in April, but the economy faces persistent pressure as activity and demand remain weak.

“Risks of a second COVID-19 wave and further geopolitical tensions cannot be ruled out, but these have yet to morph into material impact at this point,” said Jingyi Pan, a Singapore-based market strategist at financial services firm IG.

Frank Benzimra, head of Asia equity strategy at Societe Generale, said he expects more fiscal and monetary efforts by Beijing to fight unemployment, which could benefit Chinese sectors including infrastructure.

China’s consumer staples sector fell 1.15% and the healthcare sub-index dropped 1.96%, while the real estate index rose 0.19%.

The smaller Shenzhen index ended down 0.85% and the start-up board ChiNext Composite index fell 1.964%.

The largest percentage gainers in the main Shanghai Composite index were Sichuan Hongda Co Ltd, up 10.19%, followed by Silvery Dragon Prestressed Materials Co Ltd Tianjin, which rose 10.14% and Shangying Global Co Ltd, up 10.08%.

Agencies