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Equities tumble as Trump revives trade war fears

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By Agence France-Presse

Stock markets suffered steep losses Monday, tracking a selloff in New York after Donald Trump sparked fears of a renewed trade war with China over its role in the coronavirus pandemic.

Donald Trump's attacks on China for its handling of the virus outbreak have fanned fears of another trade war between the economic superpowers (AFP / JIM WATSON /MANILA BULLETIN)

Donald Trump’s attacks on China for its handling of the virus outbreak have fanned fears of another trade war between the economic superpowers
(AFP / JIM WATSON /MANILA BULLETIN)

Claims by the US president and Secretary of State Mike Pompeo that the disease started in a lab in Wuhan, and that those responsible would be held to account, overshadowed a further slowing of infections and deaths from COVID-19.

The losses across Asia came as investors returned from an extended weekend break and after all three main indexes on Wall Street tanked between 2.6 and 3.2 percent, having enjoyed their best month in decades in April.

Trump suggested he could lump new tariffs on China over its handling of the virus outbreak, claiming he had seen evidence linking a Chinese lab to the contagion.

The warning fanned worries of a return to the trade standoff between the world’s top two economies that battered global markets last year until a partial agreement was reached in December.

It also comes as Trump faces a tough fight to be re-elected in November with the economy tanking and millions of Americans losing their jobs because of the virus crisis.

“President Trump is back beating the trade war drums… and increasing the odds of a significant volatility risk event as all roads lead back to trade and tariff,” said AxiCorp’s Stephen Innes.

He added that “while the market is already factoring in a less globalised world during the initial phase of the post-pandemic recovery as economies internalise, rekindling a dormant US-China trade war will likely make any economic improvement exponentially more difficult. And ripping up the trade agreement will trigger a global equity market rout.”

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