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

By Gina Lee – Asian stocks suffered losses on Monday morning as tensions escalated between the United States and China, prompting investor fears of a further obstacle to the global economic recovery from the COVID-19 pandemic.

U.S. Secretary of State Michael Pompeo said overnight that there was “enormous evidence” showing that the COVID-19 outbreak began in a Wuhan laboratory, but he did not elaborate on what the evidence was.

Pompeo’s comment came after U.S. President Donald Trump demanded answers from China about the virus’s origin, even hinting at possible retaliation last Thursday. Trump added overnight that he believed that a Chinese “mistake” was the cause of the COVID-19 outbreak, though he also did not present any evidence for the claim. 

Beijing has denied the accusations.

The U.S.-China tensions dampened investors’ moods even as some countries loosened their lockdowns, raising hopes for a start to the global economic recovery.

Hong Kong’s Hang Seng Index dived 3.77% by 10:47 PM ET (3:47 AM GMT) as the U.S. -China tensions flared.

Down Under, the ASX 200 was the sole bright spot. It rose 0.51% as the Reserve Bank of Australia is expected to maintain its three-year yield target at 0.25% and the cash rate at the same level at its meeting on Tuesday.

South Korea’s KOSPI is down by 1.91%.

Meanwhile, investors’ moods were further dampened over fears of a second wave of COVID-19 cases even as some countries loosen lockdown measures implemented to curb the spread of COVID-19.

“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.” Mizuho Bank economists said in a note. 

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