Huawei CFO arrest: Global stocks plunge, suggesting a grim day on Wall Streethttps://indianexpress.com/article/business/world-market/huawei-us-china-meng-wanzhou-wall-street-5482148/

Huawei CFO arrest: Global stocks plunge, suggesting a grim day on Wall Street

Investors’ anxiety over the fragile peace between the world’s two largest economies mounted after the chief financial officer of Huawei, Meng Wanzhou, was arrested in Canada at the request of the United States.

Huawei, wall street, global market, Meng Wanzhou, Meng Wanzhou arrest, China US, US China trade, China US trade, Donald Trump, Xi jingping, World market, Indian express, latest news
An investor reacts near boards displaying stock market prices in Beijing, China, Thursday, Dec. 6, 2018. Asian stock prices skidded Thursday following the arrest of a senior official at Chinese telecoms equipment maker Huawei that could derail progress in China-US trade talks. (AP Photo/Ng Han Guan)

Written by Alexandra Stevenson

Global stock markets fell sharply Thursday and Wall Street was poised for another sell-off after cautious hopes for a lasting trade truce between the United States and China were jolted anew by the arrest of a prominent Chinese technology executive.

Investors’ anxiety over the fragile peace between the world’s two largest economies mounted after the chief financial officer of Huawei, Meng Wanzhou, was arrested in Canada at the request of the United States.

Read: Top Huawei executive is arrested in Canada for extradition to US

Meng was arrested in Vancouver on Saturday, the same night that President Donald Trump and President Xi Jinping of China dined together in Buenos Aires, Argentina, and agreed to a 90-day pause in their countries’ trade war. The move was expected to renew tensions.

Advertising

All major markets in Asia ended the trading day down more than 1 per cent, and several slid further. Results were grimmer in Europe, where major indexes in London, Frankfurt and Paris hit their lowest levels in about two years.

Huawei, wall street, global market, Meng Wanzhou, Meng Wanzhou arrest, China US, US China trade, China US trade, Donald Trump, Xi jingping, World market, Indian express, latest news
Pedestrians walk past a Huawei retail shop in Beijing Thursday, Dec. 6, 2018. China on Thursday demanded Canada release a Huawei Technologies executive who was arrested in a case that adds to technology tensions with Washington and threatens to complicate trade talks. (AP Photo/Ng Han Guan)

In Asia, the tone for the day was set in Hong Kong, where investors rattled by Meng’s arrest focused their attention on technology stocks and the overall market dropped 2.5 per cent. The shock wave was felt across the border in Shenzhen, where stocks fell 2.2 per cent.

Also read: How arrest of Huawei Technologies CFO extends troubled history with US

In Tokyo, the market fell nearly 2 per cent after the governor of the Bank of Japan warned that the trade war would hurt the Japanese economy. Traders in Seoul, South Korea, pushed the market down more than 1.5 per cent; stocks in Taiwan were down 2.3 per cent.

Futures contracts that predict the performance of stocks indicated that the US markets, which were closed Wednesday in observance of President George HW Bush’s funeral, would experience another day of selling when they reopened Thursday. Stocks on Wall Street fell more than 3 per cent Tuesday.

Huawei, wall street, global market, Meng Wanzhou, Meng Wanzhou arrest, China US, US China trade, China US trade, Donald Trump, Xi jingping, World market, Indian express, latest news
A profile of Huawei’s chief financial officer Meng Wanzhou is displayed on a Huawei computer at a Huawei store in Beijing, China, Thursday, Dec. 6, 2018. Canadian authorities said Wednesday that they have arrested Meng for possible extradition to the United States. (AP Photo/Ng Han Guan)

Concerns persist that the tensions between the United States and China could further slow a global economy already showing signs of cooling.

“The world economy is still expanding at a rapid pace, but cracks are starting to appear in the global growth picture,” Brian Coulton, a chief economist at Fitch Ratings, wrote in a note to clients. Fitch has repeatedly warned of China’s debt binge and the challenges facing the second-largest economy after the United States.

The week began an optimistic note, with the announcement that Trump and Xi had reached a deal on the sidelines of the Group of 20 meeting. Stocks around the globe soared on the news.

But a series of tweets from Trump, who called himself “a Tariff Man” prompted a new round of selling.

The only thing that seems certain is more uncertainty, analysts said.

Advertising

“While the likelihood of an ongoing dialogue after months of no discussions and the pause on tariffs are still positive developments, it’s clear that negotiations will be challenging and a source of volatility,” Mark Haefele, chief investment officer at UBS wealth management, said in a note to clients.