The U.S. Secretary of State Mike Pompeo ramped up the criticism against China over the country’s handling of the coronavirus and its origins as the stock market faces another tense jobless claims report. | Source: AP Photo/Richard Drew

  • Dow Jones Industrial Average (DJIA) futures turned negative on Thursday, pointing to a weak open on Wall Street.
  • The White House and US intelligence agencies ramped up attacks on China over the coronavirus epidemic.
  • The conflict threatens to destabilize relations between the two super-powers and impact trade.

The U.S. stock market looks set for a nervous open on Thursday as Dow Jones Industrial Average (DJIA) futures swung wildly overnight.

Tensions between America and China are reaching boiling point as Secretary of State Mike Pompeo came out swinging last night. He began by accusing China of covering up the severity of the coronavirus outbreak.

[China] covered up how dangerous the disease is. It didn’t report sustained human-to-human transmission for a month until it was in every province inside of China. It censored those that tried to warn the world. It ordered a halt to testing of new samples and it destroyed existing samples.

In a later interview he further legitimized the conspiracy that a Wuhan virology lab may have some involvement in the virus.

Even today, the Chinese government hasn’t permitted American scientists to go into China, to go into not only the Wuhan lab but wherever it needs to go to learn about this virus, to learn about its origins.

The rising conflict between the two nations threatens to reignite the trade war.

Dow swings wildly ahead of jobless claims data

Dow futures contracts looked nervous overnight, swinging in and out of positive territory. After an initial drop, the market is now flat ahead of Thursday’s jobless claims report. Analysts expect a further 4 million unemployed for a total of 25 million since the crisis began.

After a choppy overnight session, Dow Jones Industrial Average (DJIA) futures point to a flat open. Source: Yahoo Finance

S&P 500 futures and Nasdaq Composite futures were up 0.2% and 0.09% respectively.

White House gets aggressive on China

In a blistering statement, Pompeo blamed both the World Health Organization and the Chine government for failing to react fast enough.

We strongly believe that the Chinese communist party did not report the outbreak of the new coronavirus in a timely fashion to the World Health Organization.

He demanded more openness and transparency from China, and accused the nation of bullying its neighbours, Hong Kong and Taiwan, during the pandemic. The remarks are likely to stir controversy in Beijing.

US intelligence agencies points finger at China

Throwing fuel on the fire, U.S. intelligence agencies has accused Chinese agents of fake messaging. Officials say Chinese agents sent ‘fake text messages and social media posts‘ to Americans ahead of the lockdowns to stoke panic and fear. It’s a move that Sue Gordon, former principal deputy director of National Intelligence compared to Russian interference.

It’s not shocking that our adversaries and competitors would use information in the digital environment to achieve their aims. I think everyone learned a bit from Russian interference … They took advantage of the Covid pandemic as quickly as they did, it’s kind of a perfect storm of how you create chaos and sow distrust.

China hits back

Although Beijing has yet to respond directly, the editor of China’s English-speaking newspaper Global Times had some strong words for Mike Pompeo. Hu Xijing called him a “big mouth politician.”

What you’re spewing out is just political virus that undermines global solidarity. Tell the world what contribution the US has made to humanity’s virus fight?

Tension is brewing. And the last thing the stock market needs right now is a return to US-China trade tension. The much-lauded phase one trade deal may already be crumbling as law-makers urge Trump to demand more concessions in light of the Covid-19 outbreak.

Dow Jones braces for record unemployment numbers

Elsewhere on the market today, investors are bracing for another painful jobless claims report. Unemployment numbers are expected to climb a further 4 million today, putting the total near 26 million since the crisis began. As Joseph Brusuelas at RSMA put it, a decade of new jobs has now been wiped out in the space of five weeks.

It wipes out all the job gains during the long expansion. Once the economy begins to reopen initial claims will slow, but we have to be honest, not everyone is going to get their jobs back.

As for today’s earnings calendar, we’ll hear from E*Trade, Expedia, Unilever and Intel later today.

This article was edited by Samburaj Das.

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