An escalating war of words between the United States and China over the origins of the novel coronavirus pandemic sent European markets crashing to start the trading week.
The CAC-40 in Paris is down just over 4% and the Frankfurt’s DAX index has lost 3.6% in midday trading, while London’s FTSE is just slightly lower at 0.3%.
Hong Kong’s Hang Seng index lost a staggering 4% and the KOSPI in Seoul lost 2.6%, while the index in Sydney was the sole bright spot in the region, gaining 1.4%.
The markets in Japan, China and Thailand were closed for holidays.
Investors are worried that the trade tensions between the world’s two biggest economies are about to be reignited over accusations by the Trump administration that the coronavirus first detected in the central city of Wuhan late last year originated in a biosecurity lab, despite a conclusion by the U.S. intelligence community that the COVID-19 virus “was not manmade or genetically modified.”
U.S. Secretary of State Mike Pompeo on Sunday also accused Beijing of hiding the severity of the virus while stockpiling medical supplies.
China has repeatedly denied the accusations.
In oil futures trading, the price of benchmark U.S. West Texas Intermediate crude was $18.26 per barrel, down 7.6%, while Brent crude, the international benchmark, was
$25.80 per barrel, down 2.4%. Oil prices have plunged as quarantine orders imposed around the world have eradicated demand and created a massive glut of supplies, even sending U.S. crude prices below $0 per barrel nearly two weeks ago.
Futures for all three major U.S. indexes were trading down around one percent.