Financial markets are enduring further turmoil after the arrest of a Chinese Huawei executive on behalf of the US exacerbated fears over the countries’ trade war.
Shares in Asia sank after news emerged that Canadian authorities had detained the tech firm’s chief financial officer Meng Wanzhou in Vancouver, from where she is facing extradition.
Ms Meng is also the daughter of Ren Zhengfei who founded the communications technology company – China’s largest technology firm.
The arrest is believed to be related to alleged violations of US sanctions against Iran though there has been no official statement from Washington.
Traders said the development raised fears over US-China relations and added to deepening market worries over higher US interest rates, fears of a US recession and other potential risks to global growth such as Brexit.
There was initially a positive market reaction to the trade war ceasefire, announced by President Trump after talks with his Chinese counterpart at the weekend.
But Tuesday trading saw a massive sell-off on Wall Street as investors pondered whether the truce was being over-played.
Some element of calm was restored in Asia on Wednesday after supportive comments from Beijing – its first reaction to hopes a new trade agreement between the US and China could be reached within a 90-day deadline.
But news of Ms Meng’s detention spooked sentiment on Thursday – leaving European and US markets on course for steep falls at the open.
Hong Kong’s Hang Seng index earlier lost 2.7% while the Nikkei 225 in Tokyo fell 2.5%.
The Shanghai Composite index in China dropped 1.7% as the country’s government demanded her immediate release.
Technology stocks have taken the biggest beating.
Jasper Lawler, head of research at London Capital Group, responded: Traders have quickly moved out of riskier assets reflecting nerves that the arrest is likely to escalate tensions between the US and China once again.
The timing of the arrest is key here. Markets are already incredibly nervous over slowing economic growth thanks to the inverted US yield curve.
Relations between the US and China were supposed to be on the mend after a productive G20.
However, the arrest has the potential to shatter very fragile US – Sino relations which will weigh further on global trade and growth concerns.
It looks as though, despite recent heavy selloffs, the bottom is not in sight and the markets have further to fall.
The big swings of late are representative of a very jittery market, he concluded.
(c) Sky News 2018: Shares plunge over Huawei arrest trade war concerns