HSI Plunges Over Trump's Warning To China

Hong Kong shares suffered steep losses on Monday morning on fears of a renewed trade war between China and the US after Donald Trump hit out at Beijing for its handling of the coronavirus pandemic.

The Hang Seng Index sank 3.8 percent, to 23,696 by the break.

Markets on the mainland are closed for a holiday.

There were losses across the region as investors returned from an extended weekend break and after all three main indexes on Wall Street tanked between 2.6 and 3.2 percent, having enjoyed their best month in decades in April.

Seoul, Taipei, Singapore, Manila and Jakarta were all down more than 2 percent, with Wellington off 0.7 percent. However, Sydney edged up slightly.

Analysts warned that after a strong April – fuelled by optimism the worst of the disease has passed – equities could suffer a tumultuous May as corporate earnings and other indicators reveal the extent of the damage inflicted.

"My concern is that the market has priced in all that optimism before we have confronted the worst of the bad news on the economy and on some industries and earnings," Michael Jones at Caravel Concepts told Bloomberg TV.

"There are some challenges and setbacks that are going to be hitting us in the face over the next four weeks and we are no longer priced cheaply enough to just look past all that bad news."

The downbeat mood sent the US dollar rallying against higher-yielding, riskier currencies including the Australian dollar, South Korean won and Mexican peso.

Oil prices dropped after surging last week as top producers began to ease up on the pumps as part of a deal agreed last month to slash output by 10 million barrels a day. (AFP)

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