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GLOBAL MARKETS-Stocks fall as U.S./China tensions threaten rebound

Published 04/05/2020, 06:35 pm
Updated 04/05/2020, 06:36 pm
© Reuters.
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* Pompeo says 'significant evidence' virus emerged from lab

* European stocks fall

* Oil prices slip

* U.S. futures in negative territory

By Julien Ponthus

LONDON, May 4 (Reuters) - European stock markets and oil prices fell on Monday as a spat between top U.S. officials and China over the origin of the coronavirus fuelled fears of a new trade war, derailing a rebound in global markets.

European shares .STOXX opened down 2.5% with U.S. stock futures ESc1 trading close to 1% in the red.

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 2.5%, pulled down by Hong Kong where the Hang Seng .HSI returned from a two-session holiday with its biggest drop in six weeks.

U.S. Secretary of State Mike Pompeo said on Sunday there was "a significant amount of evidence" that the virus emerged from a laboratory in the central Chinese city of Wuhan. did not provide evidence or dispute an earlier U.S. intelligence conclusion that the virus was not man-made.

An editorial in China's Global Times said he was "bluffing" and called on the United States to present its evidence.

"Concern on the potential for another flare up between the US and China is dominating price action", commented RBC strategist Adam Cole in a morning note.

Simon Black, head of investment management at wealth management firm Dolfin said investors were also adjusting their forecasts over the depth of the economic damage inflicted by the pandemic.

"It's also the economic reality sinking in", he said, adding that the rebound of over 20% from lows hit in March by global equities was likely not sustainable.

Companies listed on the pan-European STOXX 600 .STOXX are currently expected to report a 40% decline in earnings in the second quarter. activity in the euro zone collapsed last month as government-imposed lockdowns to stop the spread of the new coronavirus forced factories to close and consumers to stay indoors, a survey showed on Monday. just come off a rally of hopes, not a rally on fundamentals", Black said, pointing to the massive monetary and fiscal stimulus pledged by governments and central banks around the world.

Recent economic data paints a dire picture of the global economy after weeks of lockdowns.

In the United States, manufacturing plunged to an 11-year low last month, consumer spending collapsed, and some 30.3 million Americans have filed claims for unemployment.

Oil prices fell again, paring last week's gains, on worries a global oil glut may persist even as coronavirus pandemic lockdowns start to ease.

U.S. West Texas Intermediate (WTI) crude CLc1 futures fell to $18.66 a barrel while Brent crude LCOc1 futures were down 1.7% at $26, after touching a low of $25.50. Brent rose about 23% last week following three consecutive weeks of losses.

In currency markets, the dollar rose 0.1% to 99.38 against a basket of currencies =USD while the euro EUR= was down 0.48% at $1.0930.

The safe-haven yen JPY= fell 0.2% to 106.72 per dollar.

Global coronavirus cases have surpassed 3.5 million and deaths have neared a quarter of a million, according to a Reuters tally.

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