Dow plunges 2.4 percent after Huawei exec arrest sparks fears of US-China tension


Wall Street fell sharply early Thursday, joining a global stocks sell-off after the arrest of a key Chinese executive at Washington’s request revived worries over trade tensions.

Hours into trading, the Dow Jones Industrial Average had fallen 2.4 percent, around 600 points, to 24,423.26.

The broad-based S&P 500 also sank 2.2 percent to 2,639.13, while the tech-rich Nasdaq Composite Index shed 1.9 percent to 7,021.08.

The drops came after the arrest of Huawei executive Meng Wanzhou in Canada for extradition to the United States in an investigation into suspected Iran sanctions violations by the telecom giant.

Other headwinds facing stocks include worries over slowing U.S. growth and weakness among petroleum-linked stocks amid a pullback in oil prices as OPEC members debated a production cut.

The Meng arrest stirred tensions just as the United States and China agreed to a ceasefire in their trade spat while negotiators seek a deal within three months.

After rallying on Monday following the U.S.-China ceasefire on tariffs announced over the weekend, US markets had fallen sharply on Tuesday on skepticism about the agreement.

U.S. markets were closed on Wednesday because of the funeral of former President George H.W. Bush but resumed their downward move on Thursday following the Meng arrest.

The arrest “has fueled a heightened sense of angst that it will potentially stand in the way of the U.S. and China reaching a trade deal within their prescribed 90-day window,” said analyst Patrick O’Hare.

“Moreover, it has piqued worries that China could take some retaliatory action in the interim against U.S. companies doing business in China.”

European financial markets also took a hit Thursday.

The DAX index of blue-chip German shares shed 3.0 percent in afternoon trading Thursday before recovering slightly.

Around 3:35 p.m. (1435 GMT) the closely-watched index had fallen 335.9 points to 10,864 — its lowest level in two years — before edging back slightly.

France’s CAC 40 also dropped over 2.3 percent to 4,817.01 to the lowest level since February 2017.

The U.S.-China trade worries have also affected Asian markets.

Hong Kong’s Hang Seng index tumbled 2.5 percent to 26,156.38 and Japan’s benchmark Nikkei 225 fell 1.9 percent to 21,501.62. Australia’s S&P/ASX 200 lost 0.2 percent to 5,657.70, while South Korea’s Kospi sank 1.6 percent to 2,068.69. The Shanghai Composite index dropped 1.7 percent to 2,605.18. Shares also fell in Taiwan and all other regional markets.

2018-12-06 08:09:00

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