US stock futures and global markets dropped suddenly on Monday after the White House reignited tensions with China by blaming them for the coronavirus pandemic.
Markets In Europe And Asia Fall
Hong Kong’s Hang Seng Index (HSI) dropped over 4% and South Korea’s Kospi (KOSPI) fell by 2.7%. Asia’s other major stock markets, including those in mainland China and Japan, were shut for the holidays.
Markets in Europe also took a sharp downturn, despite the fact that many of the continent’s largest economies were easing their lockdown restrictions. France’s CAC 40 (CAC40) fell by 3.2% while Germany’s DAX (DAX) experienced a drop of 2.8%.
In London, the FTSE 100 (UKX) fell by 2.3% while Dow (INDU) futures experienced a 0.7% drop. Nasdaq (NBI) and S&P 500 (SPX) futures both fell by 0.6%.
Trump Threatens China With New Tariffs
The stock downturn is a direct result of last week’s Wall Street losses after President Trump suggested that the US could land China with new tariffs as a punishment for the COVID-19 outbreak.
Mike Pompeo, the US secretary of state, claimed that China had attempted to conceal the spread of the virus and its severity while hoarding medical supplies.
Pompeo also claimed that there is ‘enormous evidence’ that the virus had been created in a Wuhan laboratory, despite scientists’ claims that the virus was not manmade.
Trade War Could Be On The Horizon
The White House’s comments could lead to renewed trade tensions, which could hinder economic improvement for the already-suffering global economy.
Since mid-March, over 30 million US citizens have filed unemployment claims and the unemployment level is predicted to be at its highest since 1939.
According to the International Monetary Fund, the global economy is experiencing its biggest downturn since the Great Depression and the recession could last until 2021 if an effective response to the pandemic is not implemented globally.
Oanda‘s senior market analyst, Jeffrey Halley, said:
“President Trump needs to put some hard facts on the table, or risk sending the world into an L-shaped, trade-war driven recession on top of a recession, that even bottomless monetary and fiscal responses cannot soften.”
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