Global stocks mostly drop as Trump revives trade war fears

NEW YORK, USA – Global stocks mostly fell on Monday, May 4, after United States President Donald Trump sparked fears of a renewed trade war with China over its role in the coronavirus pandemic.

Key eurozone markets lost more than 3.5% on simmering US-China tensions, with Frankfurt and Paris tumbling after a long holiday weekend.

Meanwhile, Wall Street stocks shrugged off early weakness and ended in positive territory as more US states moved to reopen their economies.

Millions of Europeans also emerged from lockdown on Monday, with Italy, the continent’s hardest-hit country, leading the way out of its two-month coronavirus confinement.

But investors were rattled as the Trump administration stepped up its criticism of China over the coronavirus.

“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.

“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.”

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

US Secretary of State Mike Pompeo has also been aggressive in bringing into the mainstream a theory that the illness that has killed nearly 250,000 worldwide slipped out of a virology laboratory in the Chinese city of Wuhan, where the virus first emerged last year.

On Wall Street, investors were encouraged by moves in several large states to gingerly reopen for business following coronavirus closures, generally employing physical distancing measures, stepped-up sanitation practices, and mask requirements at stores.

Public health data shows a leveling off of cases in hot spots such as New York and New Orleans, but the US as a whole continues to log more cases and some health experts expect the current US death toll of 68,000 to hit 100,000 in June.

Major airlines, including Delta Air Lines and United, saw their share prices fall 5% or more after billionaire investor Warren Buffett announced he liquidated his holdings in the sector amid a deep downturn.

But Carnival jumped 2.9% as the cruise giant announced it will resume limited operations from Florida and Texas on August 1 after halting trips because of the pandemic which in the early days left passengers trapped on some of its ships for weeks. – Rappler.com