In reduced trade, with China and Japan on holiday, US stock futures fell 1.7 percent and U.S. crude tumbled seven percent. The safe-haven US dollar rallied to one-week highs against the risk sensitive Australian and New Zealand dollars. South Korea’s KOSPI fell, Hong Kong’s Hang Seng returned from a two-session holiday with a 3.5 percent drop, while Australia’s ASX 200 eked out a 0.5 percent gain.
The moves extended a sour start in May which began on Friday with bleak US data and the threat of fresh trade-war hostilities between the world’s two biggest economies.
US President Donald Trump and Secretary of State Mike Pompeo added to worries with fresh efforts to pin blame for the pandemic on China, where the new coronavirus outbreak is believed to have originated.
The latest salvo came from Pompeo on Sunday who said there was “a significant amount of evidence” that the virus emerged from a laboratory in the central Chinese city of Wuhan.
Pompeo did not provide evidence, or dispute a US intelligence conclusion that the virus was not man-made. But the comments double down on Washington’s pressure on China as U.S. deaths and economic damage mount.
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FTSE 100 LIVE: Asian stocks plummeted on Monday
Oil prices have plummeted
10am update: FTE 100 update
The FTSE 100 index at 9.45am was down 10.32 at 5752.74.
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Global stock markets struggled on Monday
9.55am update: South Africa’s economy crippled
South Africa’s economy could contract by as much 12 percent and unemployment balloon to more than third of the workforce due to the impact of the coronavirus.
Director-General of the National Treasury Dondo Mogajane said: “Anything between minus 7 percent up to 12 percent could be the impact (on GDP). We have to focus on the post-virus environment so we can contain the impact … It’s gonna be huge.
“We could even reach 40 percent unemployment if things go the way they are. The manufacturing industry is impacted. Mining is impacted. The services sector is impacted. Look at tourism for instance, it’s on its knees.”
9.18am update: Pound falls
The pound fell to its lowest level since Wednesday overnight, driven by a stronger dollar as China-US relations worsened, but it erased some losses in early London trading on Monday.
Against the dollar, the pound was last at $ 1.2452, having fallen 0.4 percent since New York’s close on Friday.
It recovered somewhat between 7am and 8am as London opened, before falling again.
The pound was broadly flat against the euro, at 87.81 pence.
The US is on lockdown over the coronavirus
8.45am update: FTSE 250 index drops
The domestically focussed FTSE 250 index shed 0.9 percent, deepening a 1.9 percent slide on Friday.
8.33am update: FTSE down
The FTSE 100 index at 8.15am was down 32.11 at 5730.95.
8.16am update: UK markets dip
UK stock markets dipped on Monday as US-China tensions flared up again over the origin of the coronavirus.
Rolls-Royce fell 4.2 percent to the bottom of the FTSE 100 after a source reported it was mulling cutting up to 15 percent of its workforce as customers cut production and airlines parked planes due to a halt in global travel.
The blue-chip FTSE 100 was down 0.7 percent, deepening a 2.3 percent slide on Friday, when US President Donald Trump pinned the blame for the pandemic on China and threatened new tariffs.
China is easing its lockdown restrictions
8.01am update: FTSE 100 opens
The FTSE 100 index opened at 5763.06.
7.48am update: FTSE 100 update
The FTSE 100 index at 7.44am was unchanged at 5763.06.
7.43am update: UK-US trade talks to begin
Trade talks between the UK and the US are due to open on Tuesday despite the ongoing coronavirus pandemic.
International Trade Secretary Liz Truss and US Trade Representative Robert Lighthizer will meet via video call, while around 100 officials listen in from both countries.
It is understood that the first round of talks are set to last for about two weeks, while further rounds will take place around every six weeks.
7.31am update: European shares slump
The Euro STOXX 50 futures fell 3.3 percent by 7.13am, suggesting a downbeat start in May after the STOXX 600 recorded a 6 percent gain in April.
German stock futures were down 3.2 percent, while France’s CAC 40 fell 3.2 percent. FTSE futures dropped 0.4 percent.
7.03am update: FTSE futures drop
FTSE futures fell 0.6 percent and European shares seemed set to return from a May Day break with a slump. EuroSTOXX 50 futures fell 3 percent.
6.18am update: Asia’s factory activity ravaged in April due to coronavirus
A series of Purchasing Managers’ Indexes (PMIs) from IHS Markit fell deeper into contraction from March, with some diving to all-time lows and others hitting levels last seen during the 2008-2009 global financial crisis.
Similar gauges out of Europe’s largest economies due on Monday and later in the week are also expected to show dire global industry conditions.
The PMI for South Korea, Asia’s fourth-largest economy and a global manufacturing powerhouse, skidded to 41.6 in April, the lowest reading since January 2009. Japan’s PMI released last week similarly fell to an 11-year low.
“The bad news is that the hit to industry in many places is unlikely to be passed the worst,” Alex Holmes, Asia Economist at Capital Economics, wrote in a note.
“Global demand has slumped and we don’t think it has bottomed out yet. The latest incoming data for the U.S. and Western Europe point to an unprecedented slump in demand. And while China’s economy has started to recover, demand there remains very weak.”
5.56am update: Oil prices lower due to US-China trade tension
Oil prices fell in early trade on Monday, paring last week’s gains, on worries the global oil glut may persist as US-China trade tension could hold back an economic recovery even as coronavirus pandemic lockdowns start to ease.
US West Texas Intermediate (WTI) crude CLc1 futures fell as low as $ 18.32 a barrel and were down $ 1.46, or 7.6 percent, at $ 18.27 at 12.08am GMT. The benchmark contract rose 17 percent last week.
Brent crude LCOc1 futures were down 90 cents, or 3.4 percent, at $ 25.54, after touching a low of $ 25.53. Brent rose about 23 percent last week following three consecutive weeks of losses.