US equity futures, European stock markets and oil prices all fell on Monday as an escalating war of words between top U.S. officials and China over the origin of the coronavirus fuelled fears of a new trade war, derailing a rebound in global markets, while Buffett’s admission he had liquidated all his airline stocks sent the sector tumbling.
European shares – which were closed on Friday – slumped 2.5% in mid-morning trading, catching up to the Friday drop in the US with sectors sensitive to economic growth including oil and gas, automakers and banks falling between about 4% and 5.5%. Volatility gauges for European and American blue-chip stocks shot up to a two-week high while U.S. stock futures were about 1% in the red.
Delta Air Lines, American Airlines Group and United Airlines Holdings are among the biggest pre-market decliners after Warren Buffett said over the weekend Berkshire Hathaway sold out of the four top U.S. airlines, opining that the business has “changed in a very major way.” The JETS airline ETF tumbled -10%.
In Europe, the Stoxx Europe 600 slumped, with all 19 industry sectors in the red and Ireland’s Ryanair Holdings Plc sinking as much as 11%. Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.5%, pulled down by Hong Kong where the Hang Seng returned from a two-session holiday with its biggest drop in six weeks as traders caught up after a long weekend. China and Japan were closed for their own holidays. The Chinese yuan held most of Friday’s slide in offshore trading amid concern tensions with the U.S. would increase.