The chief financial officer of Chinese tech giant, Huawei has been arrested in Canada after suspicions the company breached trade sanctions against Iran.
The United States is seeking the extradition of Meng Wanzhou, with news of the arrest sending shockwaves through global markets.
The S&P 500 closed down 1.29 per cent, or -34.8 points, while the Dow Jones closed down 1.30 per cent, or -324.15 points. The Dow Jones Industrial Average lost as much as 784.85 points earlier in the session.
The FTSE 100 also saw a fall of £56bn in its biggest market fall since the Brexit vote in June 2016.
The arrest comes just days after US President Donald Trump and Chinese leader Xi Jinping engaged in trade talks at the G20 summit, which most considered a positive development.
However, according to analysts, this arrest will offset any optimism after the G20.
“Public opinion in China will likely become more negative in respect to the trade war, and potentially against US companies,” Deutsche Bank analyst Zhiwei Zhang said on Thursday.
“The trade talk has just been resumed at the G20 meeting; now its outlook has darkened.”
What does China think?
They’re not happy.
“The Chinese side firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim,” China said in a statement on its Canadian embassy’s website.
“The Chinese side has lodged stern representations with the US and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms. Meng Wanzhou.
“We will closely follow the development of the issue and take all measures to resolutely protect the legitimate rights and interests of Chinese citizens.”