U.S. stock futures and global shares abruptly crashed on Monday, after the White House restarted its friction with China over the blame for the coronavirus pandemic.
Markets In Europe And Asia Fall
Hong Kong’s Hang Seng Index (HSI) dropped by more than 4 percent and South Korea’s Kospi (KOSPI) dropped by 2.7 percent. Asia’s other big financial exchanges, including those in mainland China and Japan, were closed for holidays.
Markets in Europe have already experienced a pronounced downturn, despite the fact that many of the continent’s biggest markets have relaxed their lockout constraints. The French CAC 40 (CAC40) decreased by 3.2 percent, while the German DAX (DAX) decreased by 2.8 percent.
In Paris, the FTSE 100 (UKX) dropped by 2.3 percent, while the Dow (INDU) futures declined by 0.7 percent. Both Nasdaq (NBI) and S&P 500 (SPX) futures dropped by 0.6 percent.
Trump Threatens China With New Tariffs
The market downturn is a direct result of Wall Street losses last week, after President Trump indicated that the US could slap China with new tariffs as a punishment for the outbreak of COVID-19.
Mike Pompeo, US Secretary of State, claimed that China had tried to conceal the spread and nature of the virus while obtaining medical supplies.
Pompeo also suggested that there was ‘enormous evidence’ that the virus had been created in the Wuhan laboratory, despite the scientists’ argument that the virus was not man-made.
Trade War Could Be On The Horizon
The remarks of the White House could contribute to increased trade tensions, which could impede the economic improvement of the already-suffering global economy.
Since mid-March, more than 30 million US citizens have filed unemployment claims and the unemployment rate is expected to be at its biggest peak since 1939.
According to the International Monetary Fund, the world economy is facing the biggest slowdown since the Great Depression, and the recession could last until 2021 if the global response to the pandemic is not successful.
Oanda’s senior market strategist, Jeffrey Halley, said that President Trump needs to place the real evidence on the table, or risk throwing the globe into an L-shaped, trade-war-driven recession that can’t be eased even with the bottomless monetary and fiscal responses.