European stock markets and oil prices fell as a spat between top U.S. officials and China over the origin of the coronavirus fuelled fears of a new trade war, derailing a rebound in global markets.European shares opened down 2.5% with U.S. stock futures trading close to 1% in the red.Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.5%, pulled down by Hong Kong where the Hang Seng returned from a two-session holiday with its biggest drop in six weeks.
U.S. Secretary of State Mike Pompeo said there was “a significant amount of evidence” that the virus emerged from a laboratory in the central Chinese city of Wuhan.
Pompeo did not provide evidence or dispute an earlier U.S. intelligence conclusion that the virus was not man-made.
An editorial in China’s Global Times said he was “bluffing” and called on the United States to present its evidence.
Simon Black, head of investment management at wealth management firm Dolfin said investors were also adjusting their forecasts over the depth of the economic damage inflicted by the pandemic.
“It’s also the economic reality sinking in”, he said, adding that the rebound of over 20% from lows hit in March by global equities was likely not sustainable.
Manufacturing activity in the euro zone collapsed last month as government-imposed lockdowns to stop the spread of the new coronavirus forced factories to close and consumers to stay indoors, a survey showed.
Recent economic data paints a dire picture of the global economy after weeks of lockdowns.
In the United States, manufacturing plunged to an 11-year low last month, consumer spending collapsed, and some 30.3 million Americans have filed claims for unemployment.
Oil prices fell again, paring last week’s gains, on worries a global oil glut may persist even as coronavirus pandemic lockdowns start to ease.
U.S. West Texas Intermediate (WTI) crude futures fell to $18.66 a barrel while Brent crude futures were down 1.7% at $26, after touching a low of $25.50. Brent rose about 23% last week following three consecutive weeks of losses.
Stocks fall as U.S./China tensions threaten rebound