The Arrest Of Huawei CFO Meng Wanzhou Rocks Tech
Asian markets were down across the board as trade fears flare-up once again. The CFO of Huawei, a Chinese tech conglomerate, was arrested in Canada and is set for extradition to the US. The arrest is for an alleged violation of sanctions against Iran and could result in a major international incident.
The Hong Kong-based Heng Seng Index led the market lower on weakness throughout the tech supply chain. The index shed nearly -2.5% and was by far the worst performing index. The Japanese Nikkei declined about -1.90% while the Shang Hain Composite fell only -1.70%. Australia was sheltered from most of the selling as it is not a leader in tech but it still fell -0.20% in Thursday trading.
The arrest of Meng is feared to add strain to an already tense relationship between the US and China. The newly enacted trade-truce is far from binding and could fall apart at any time. Meng’s arrest is an example, however, of the US long-standing issues with China and its trade practices.
Trade Tensions Pressure The EU
Trade was the main concern in EU markets as the global sell-off in equities continues. The German DAX was the loss-leader at midday but the CAC and FTSE were close behind with losses near -2.50% for the lot. The tech sector was one of the hardest hit with the Huawei arrest adding to negative sentiment.
The miners were also hit hard with losses near -3.0% as slowing growth (a result of poor trade relations) drags on the market. The automakers, another trade-sensitive industry, were also down about -3.0%.
US Traders Eye Data For Signs Of Economic Slowdown
In the US traders have an eye turned to the economic data as they look for signs of an economic slowdown. The jobless claims and ADP figures, released in the early pre-market session, both point to ongoing strength in labor markets so a slowdown is not indicated by this data. Later in the day, a report on ISM Manufacturing activity and US productivity may show differently.
Trade data shows imports into the US surged to a decade high as business try to front-run expected tariffs. The tariffs, an increase from 10% to 25% on Chinese goods already taxed by the US, was set to take effect in January and off the table (supposedly) now that a truce has been struck.
US markets were trading lower in early Thursday action, pressured by weakness in tech and trade-related fears. The tech-heavy NASDAQ Composite was leading with losses near -2.0% in the earliest hours of trading but the declines moderated after the morning’s data was released.
This article was originally posted on FX Empire
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