Asian stocks dipped on Monday as investor sentiment has deteriorated at the start of the trading week amid rising tensions between the United States and China. Last week, President Donald Trump threatened to impose new tariffs against China to punish the country for allegedly downplaying the severity of the coronavirus. Hong Kong’s Hang Seng index tumbled 3.7%, South Korea’s Kospi fell 1.8% while Australia’s S&P/ASX 200 edged up 0.4%. Markets in Japan and China were closed for holidays.
In Europe, the sell-off continued as investors were digesting the US-China tensions. US Secretary of State Mike Pompeo said on Sunday there was enormous evidence that the coronavirus pandemic originated in a lab in the city of Wuhan. Now, the US is weighing the possibility of imposing fresh tariffs on China, with the Trump administration looking to remove global supply chains from the country. As a result, the German DAX 30 dropped 3.7%, the French CAC 40 fell 4.28%, and the U.K. FTSE 100 eased 0.28%.
Wall Street futures followed suit amid a fresh spat between Washington and Beijing. Shares of the top four U.S. airlines dropped Berkshire Hathaway said it offloaded its entire stake in the carriers last month. Berkshire had held an 11% stake in Delta, 10% in American, 10% in Southwest, and 9% in United at the end of 2019.
In currencies, the dollar is mostly higher against the majors amid the prevailing risk aversion on Monday. EURUSD slipped from highs registered above 1.10 on Friday but holding above the 1.09 handle so far. On the data front, The Eurozone final Markit manufacturing PMI came in at 33.4 in April while the EU Sentix investor confidence index plunged to -41.8 in May versus -33.5 expected. Weak data added to the negative pressure surrounding the common currency. However, downside risks are looking limited as long as the pair stays above the 1.0870 support area.
Elsewhere, bitcoin price retains its bearish bias after a rejection from local highs around $9,500 registered last week. BTCUSD has settled just below $8,800 and may suffer further losses if the prices fail to regain the $9,000 handle in the near term.