World Shares Skid as Huawei CFO Arrest Revives Trade Jitters

World financial markets took a fresh hit Thursday following the arrest of a senior official at Chinese telecoms equipment maker Huawei that could hinder progress in China-U.S. trade talks.

The DAX in Germany fell 1.6 percent to 11,024.04 and France’s CAC 40 dropped 1.5 percent to 4,869.70. The FTSE 100 in Britain lost 1.5 percent to 6,818.32. U.S. futures also augured a downbeat start for Wall Street after Wednesday’s market closure for the funeral of former President George H.W. Bush. The contract for the Dow lost 1.2 percent to 24,759.00 and that for the S&P 500 declined 1.1 percent to 2,673.10.

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.

The news of Huawei CFO Meng Wanzhou’s arrest sent shares sharply lower. Shares had rallied Monday following President Donald Trump’s agreement with his Chinese counterpart Xi Jinping over the weekend to hold off on further retaliatory moves in a festering trade war. But they’ve since fallen back amid confusion over what the two sides agreed to and whether the deal will enable Beijing and Washington to resolve longstanding, profound differences over technology policy and other issues. China demanded Meng’s immediate release.

“We are closely watching the developments in Asia after reports that Canada has arrested the Huawei CFO facing U.S. extradition for allegedly violating Iran sanctions. This headline is quite significant as the U.S. government is attempting to persuade allies to stop using Huawei equipment due to security fears, and this headline could weigh negatively on tech stocks,” said Stephen Innes, head of trading at Oanda in Singapore.

The dollar slipped to 112.69 yen from 113.20 yen. The euro was flat at $1.1343.