By Shreyashi Sanyal and Medha Singh
(Reuters) – U.S. stock index futures retreated on Monday after a fresh spat between Washington and Beijing over the origin of the novel coronavirus, while airlines slumped as Berkshire Hathaway dumped its holdings in the sector.
Delta Air Lines
Warren Buffett-backed Berkshire’s
Berkshire Hathaway itself posted a record quarterly net loss of nearly $50 billion and said its performance was suffering in several major operating businesses. Its shares fell 1.4%.
Over the weekend, U.S. Secretary of State Mike Pompeo said there was “a significant amount of evidence” that the coronavirus emerged from a Chinese laboratory, but did not dispute U.S. intelligence agencies’ conclusion that it was not man-made. An editorial in China’s Global Times said Pompeo was “bluffing”.
Pompeo’s statement comes after Wall Street started May on a grim note as President Donald Trump revived a threat of new tariffs against China in response to the COVID-19 pandemic.
“When you think how nervous markets got about the U.S.-China trade war then if this theme continues you can’t help thinking that the end game is far worse than it would be from a simple trade war,” said Jim Reid, a strategist at Deutsche Bank.
The S&P 500 index’s <.spx> 29% recovery from its March lows stands to be tested as investors weigh renewed U.S.-China tensions and the economic damage of the health crisis.
At 7:28 a.m. ET, Dow e-minis were down 267 points, or 1.13%. S&P 500 e-minis
Investors are also awaiting factory orders data for March, which is expected to show a sharp decline.
With more than half of the S&P 500 companies having reported earnings so far, analysts now see first-quarter S&P 500 earnings falling 12.7% from a year ago, and an even sharper 37.8% decline for the second quarter.
(Reporting by Shreyashi Sanyal and Medha Singh in Bengaluru; Editing by Saumyadeb Chakrabarty)
