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Stocks mostly slide on Trump's coronavirus warning

  • Trump issued the gloomy warning in his first formal White House virus briefing since the end of April -- and the news sent Asian and European stocks sliding on Wednesday.
Published July 22, 2020
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LONDON: Global stocks sank Wednesday after US President Donald Trump warned that the coronavirus crisis in the US was likely to "get worse before it gets better".

Trump issued the gloomy warning in his first formal White House virus briefing since the end of April -- and the news sent Asian and European stocks sliding on Wednesday.

"It will probably, unfortunately get worse before it gets better," Trump told reporters during his first formal pandemic briefing for nearly three months.

The president also urged Americans to wear facemasks to help prevent the spread of the highly contagious virus which has left more than 141,000 people dead in the US.

'Time to be concerned'

"Abandoning an initially placid start, the European markets (are) scared by Donald Trump's claim," said Spreadex analyst Connor Campbell.

"After all, if Trump has now dropped his long-held stance that everything is okay, then it is probably time to really be concerned."

Nearing the half-way mark, London stocks shed 0.9 percent, Paris dived 1.1 percent and Frankfurt shed 0.3 percent.

Equities were also pressured as tensions between China and the US flared up again, biting into the previous day's strong rally, with optimism over a possible coronavirus vaccine also tempered by concerns about the slow progress of new US stimulus talks.

News that trials on a vaccine had shown early promise provided a much-needed boost to equities, particularly as a spike in new infections around the world has caused some governments to reimpose economy-strangling containment measurements.

Markets had also rallied Tuesday after EU leaders sealed a 750-billion-euro ($858-billion) coronavirus rescue package for the bloc.

China-US frictions returned Wednesday after Beijing said it had been ordered to close its Houston consulate, escalating a standoff between the superpowers.

The move comes with the two at loggerheads on a laundry list of issues, from trade to Beijing's handling of the coronavirus pandemic and its policies in Hong Kong, Xinjiang and the South China Sea.

The news emerged towards the end of the Asian trading day and contributed towards the sell-off.

Hong Kong led losses, tumbling 2.3 percent also after figures showed another record rise in new infections in the city -- which has fanned fears of tighter restrictions.

Gold sparkles

The increase in China-US tensions, expectations that interest rates will remain low for some time, and ongoing COVID-19 uncertainty have also led traders into gold.

The previous metal -- which is considered a safe bet in times of economic and geopolitical turmoil -- sat above $1,850 an ounce on Wednesday and is approaching its record high above $1,900.

The rally in gold, which is up almost a quarter this year, also helped drive silver to a seven-year pinnacle at $22.84 per ounce.

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