Asian stocks slip as Donald Trump blames virus on China
Asian stocks slipped this morning as renewed tensions between the US and China over the origin of coronavirus stunted optimism about the lifting of lockdown measures.
With China and Japan on holiday, other Asia-Pacific shares fell 2.5 per cent, according to an MSCI index. Hong Kong’s Hang Seng returned from a two-session holiday to suffer its biggest fall in six weeks.
The downbeat start to the week looks set to carry on elsewhere, with US stock futures down 0.7 per cent. FTSE futures fell 0.6 per cent, while Eurostoxx 50 futures tumbled three per cent.
US crude prices reversed three sessions of gains with a six per cent drop, while the safe-haven US dollar hit one-week highs against the Australian and New Zealand dollars.
It marks a continuation of Friday’s bearish moves, when disastrous US economic data and the threat of a fresh trade war between the world’s two largest economies led to sombre start to the month.
US President Donald Trump and secretary of state Mike Pompeo made renewed efforts over the weekend to pin the blame for the pandemic on China.
Pompeo yesterday said there was a “significant amount of evidence” that the virus had originated in a laboratory in the Chinese city of Wuhan.
The allegations, which were not supported with any evidence, come despite conclusions from US intelligence that the virus was not man-made.
An editorial in China’s Global Times said Pompeo was “bluffing” and called on the US to provide evidence.
“Trump’s threats of a trade tariffs and his growing desire to pull supply chains from China is fuelling fears that the trade deal, signed just the beginning of this year, could be under threat,” siad Fiona Cincotta at City Index.
“Trump’s motivation has never been greater; The devastating impact of the virus on American lives and the economy could cost him the US election. Trump’s big chance at keeping election hopes alive is through uniting the American people against a common enemy, China.”
The increase in tensions comes as data has laid bare the impact of coronavirus lockdown measures on the world economy.
Asia’s factory activity was slashed in April, according to data released today, while a freeze in global production and demand has clouded outlook.
In the US manufacturing plunged to an 11-year low last month, consumer spending has collapsed and more than 30m Americans have now filed for unemployment.