MANHATTAN (CN) — Worries that the United States and China could be entering into another trade war has some investors wary.
Without offering evidence, President Donald Trump has grown increasingly vocal about a theory that Covid-19 originated, not from contamination in Chinese wet markets, but because of a mishap at a bioweapons lab in Wuhan.
“For markets, the true threat is that the diplomatic war of words could quickly spiral into a de facto Cold War on trade,” Boris Schlossberg of BK Asset Management wrote in an investor note. “It’s this political risk with its myriad economic implication[s] amidst the devastation of the pandemic that the market may be completely underestimating.”
The Dow Jones Industrial Average lost 250 points Monday, while the S&P 500 and Nasdaq just dipped below their starting points.
White House intelligence officials say China intentionally concealed the severity of Covid-19 in January and then stockpiled medical supplies, and the administration now is looking at either boosting tariffs or pushing U.S. companies to move their manufacturing out of China.
On March 1, economic adviser Larry Kudlow said China would be “held accountable” for the virus. Over the weekend, Secretary of State Mike Pompeo called out China’s government for its secrecy, noting China kicked U.S. journalists out of the country and silenced their own medical professionals.
“This is a classic communist disinformation effort that created enormous risk,” Pompeo said on ABC’s “This Week” program. “President Trump is very clear: we’re going to hold those responsible accountable, and we’ll do so on a timeline that is our own.”
Intelligence officials in Australia and the United Kingdom also have called on China to be more transparent about the virus.
Grounding their theory in the similarity between the novel coronavirus and the interspecies transmission that led to the Sars outbreak in 2002, virologists are operating on the theory that Covid-19 originated from bats, passing to humans via an intermediary animal in an overcrowded wet market in the Wuhan area of China.
The Sars outbreak was blamed on such transmission between horseshoe bats — which can serve as hosts for a slew of diseases — and civets in a wet market.
Without any scientific evidence, however, some intelligence officials recently have questioned whether the virus could have originated at a bioweapons lab in China.
Equities markets in Asia fell Monday as tensions rose, with Hong Kong’s Hang Seng index losing more than 4.1% and South Korea’s Kospi dropping nearly 2.7%. Japan’s Nikkei and Chinese markets were closed on Monday for holidays.
European markets also were rattled by escalating tensions between the United States and China. As of 9 a.m. EST, markets in Germany and France both had dropped more than 3.5%. The pan-European Stoxx 600 fell by 2.3%.
About 3.5 million people worldwide have been confirmed infected by Covid-19, according to data from researchers at Johns Hopkins University, and more than 247,000 have died. In the United States, more than 1.1 million people have contracted the novel coronavirus and 67,000 have died.