With the explosive claim by Turkish authorities that Khashoggi, a prominent critic of Saudi leadership, was murdered in the Saudi consulate in Turkey on October 2, several major USA business leaders and media companies have withdrawn from the investors conference set for later this month. "And you know what, there are other ways of punishing", Trump said.
Trump's remarks came after Saudi Interior Minister Abdulaziz bin Saud bin Nayef rejected allegations over the death of Khashoggi as "lies", stressing that the accusations of a murder plot were targeting the Saudi government.
Former foreign secretary Malcolm Rifkind called on Britain to impose sanctions on Saudi Arabia.
FILE - Saudi Crown Prince Mohammed bin Salman waves as he meets with a visiting official in Riyadh, Saudi Arabia, April 11, 2017.
'What has been circulating about orders to kill [Khashoggi] are lies and baseless allegations against the government of the kingdom, which is committed to its principles, rules and traditions and is in compliance with global laws and conventions, ' Prince Abdulaziz said.
The index had already dropped 3.0 percent on Thursday, following a rout on world stock markets fuelled by worries about higher interest rates and US President Donald Trump's attacks on the Federal Reserve.
"I don't want to hurt jobs, I don't want to lose an order like that", Trump said. "We're going to get to the bottom of it and there will be severe punishment".
Mr Tugendhat added that it was important to establish the facts, but if the Riyadh government had murdered Khashoggi there could be a downgrading of diplomatic relations and a boycott by United Kingdom ministers.
This news has coincided with a massive WWE event that is set to take place on 2 November in Saudi Arabia.
It began with a mysterious disappearance: Jamal Khashoggi, a Saudi Arabian citizen and US resident, went to the Saudi consulate in Istanbul, Turkey, 12 days ago.
But President Trump, who also has Saudi business ties, says he does not want the U.S.to cancel lucrative military contracts with the kingdom. His administration has been on friendly terms with the Gulf regional power since taking office, supporting the Saudi-led airstrike campaign in Yemen and brokering an arms deal that could be worth $110 billion over the next decade.