A look at the day ahead from emerging markets chief correspondent Karin Strohecker. The views expressed are her own.

Chaotic scenes erupted in Hong Kong’s financial centre as new protests flared up over Beijing’s proposed national security laws, a reminder to markets that China and the United States are apparently back on collision course.

U.S. President Donald Trump said late on Tuesday Washington was working on a strong response to China’s legislation push, with measures to be announced before the end of the week.

The latest developments sent the yuan to its weakest in nine months and weighed on equity markets, leaving Asian stocks mixed.

But European stocks are resuming their rise with markets in Frankfurt, Paris and London opening 0.3-0.6% higher after closing at their strongest level since March 6 on Tuesday, eager to test investors’ appetite for further gains.

On Wall Street, the S&P couldn’t hold above 3,000 points on Tuesday, but futures for the U.S. index are currently trading up 0.75% at 3,014 points.

Safe havens are getting back into play. Euro zone government bond yields edged off their Tuesday highs, the dollar climbed and commodity currencies and sterling traded weaker. Oil prices fell amid growing concern over just how quickly fuel demand will recover.

The euro slipped after sharp gains on Tuesday as investors geared up for a big day for policy makers in Europe. The European Commission was set to introduce plans for an outline of its recovery fund, aimed at helping member nations stricken by the fallout of the coronavirus outbreak.

This comes following a debate on what shape such a fund should take after the “frugal four” – Austria, Netherlands, Denmark and Sweden – made a counter proposal to the Franco-German plan from last week, pushing for loans from a time-limited fund to nations struggling to recover from the pandemic rather than the grants proposed by Paris and Berlin. (Reporting by Karin Strohecker, editing by Larry King)

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