Asian Stocks Down on U.S. China Tensions Over COVID-19 Comments

Asian stocks suffered further losses on Monday as tensions grew between the United States and China. This led to renewed fears amongst investors that further setbacks to the recovery of global economies from the outbreak of COVID-19.

Overnight, U.S. Secretary of State Michael Pompeo claimed they had evidence that suggested the COVID-19 outbreak began in a Wuhan laboratory but was unable to elaborate on what the evidence was.

Pompeo’s comments supported accusations from U.S. President Donald Trump, with demands for answers from China about the origins of the virus being made. Last week he went as far as hinting that retaliation was an option. Trump yesterday added that he believed an accident in China was the cause of the COVID-19 outbreak, although he was unable to present any evidence to support this claim. Beijing has firmly denied such accusations.

These renewed tensions between the U.S. and China have dampened the mood of investors, even with some countries relaxing their lockdown measures, delaying hopes for the beginning of global economic recovery.

Hong Kong’s Hang Seng Index had fallen 3.77% by 10:47 pm ET as the U.S. -China tensions flared.

In Australia, the ASX 200 was the only riser, with an increase of 0.51% as the Reserve Bank of Australia expecting to maintain their three-year yield target of 0.25%.

South Korea’s KOSPI was down by 1.91%.

Fears of a second wave of COVID-19 cases, even with some relaxing lockdown measures, did little to brighten investors’ moods.

Mizuho Bank economists have said:

“Even as growth-stifling containment measures are set to be phased out in May, the global downturn looks to deepen in Q2. If prospects of hard-to-reverse job losses overwhelm, alongside Trump’s anti-China threats, ‘Mayday’ type of fear dynamics may rule the day.”

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