Hong Kong’s Hang Seng Index (HSI)
tumbled 3.8%, while South Korea’s Kospi (KOSPI)
dropped 1.6%. Other major markets in Asia, including those in Japan and mainland China, were closed for multi-day holidays.
futures fell 150 points, or 0.6%, clawing back even steeper losses earlier. S&P 500 (SPX)
futures also fell 0.6%, and Nasdaq (COMP)
futures were down 0.7%.
The declines Monday built on losses on Wall Street late last week, when US President Donald Trump hinted that the United States could punish China with new tariffs because of the coronavirus outbreak
US Secretary of State Mike Pompeo on Sunday stepped up administration claims that China mounted efforts to hide the extent of the coronavirus spread, including concealing the severity while stockpiling medical supplies. He also said there is “enormous evidence” backing Trump’s claim that the virus originated in a laboratory in Wuhan, China — though the Office of the Director of National Intelligence
has said that the intelligence community concurs with the “wide scientific consensus that the Covid-19 virus was not manmade or genetically modified.”
“Trade war clouds once again loom ominously on the horizon,” said Stephen Innes, chief global markets strategist for AxiCorp, in a Monday report.
The United States and China in January reached a truce in their lengthy trade war when the two economic superpowers signed a “phase one” agreement that included the reduction of some tariffs and commitments from China to purchase billions worth of agricultural goods and crack down on intellectual property theft.
But Trump’s recent comments suggest that trade tensions could return — and reviving the trade war “will likely make any economic improvement exponentially more difficult,” Innes said. The global economy is already suffering as the virus brought many countries to a near-standstill.
Bad economic data has also weighed on investors recently.
More than 30 million Americans
have now filed initial unemployment claims since the middle of March. Economists surveyed by Refinitiv expect the unemployment rate to have hit 16.1% last month, which would be its highest level since 1939.
This week is likely to provide greater clarity
on the US unemployment picture in the country. The US government releases its latest jobs report on Friday.
Oil, meanwhile, is also falling as the market remains damaged by an enormous lack of demand. Futures for US crude and Brent, the global benchmark, fell 3.9% and 0.3%, respectively, on Monday.
In Australia, the financial technology company Afterpay popped 23% after it confirmed that the Chinese conglomerate Tencent (TCEHY)
bought a 5% stake. Australia’s benchmark S&P/ASX 200 was also positive, rising 0.9% in afternoon trade.