Meng Wanzhou's arrest has stirred new tensions between the US and China and roiled markets [Alexander Bibik-Reuters]
Reuters

Stocks across the globe have fallen sharply joining a global stocks sell-off after the arrest of a key Chinese Huawei executive at Washington’s request revived worries over trade tensions.

About 25 minutes into trading, the Dow Jones Industrial Average had fallen two percent, around 500 points, to 24,528.26.

The broad-based S&P 500 also sank two percent to 2,646.13, while the tech-rich Nasdaq Composite Index shed 1.9 percent to 7,021.08.

In London, the stock market plunged by more than three percent.

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.

In a statement on Wednesday, Canada’s justice ministry said Meng was arrested in Vancouver on December 1.

“She is sought for extradition by the United States and a bail hearing has been set for Friday.”

The ministry added it could not provide further details because of a publication ban that was sought by Meng.

China urged Canada and the US to “clarify” the reason for Meng’s arrest and demanded her release.

“We have made solemn representations to Canada and the US, demanding that both parties immediately clarify the reasons for the detention, and immediately release the detainee to protect the person’s legal rights,” foreign ministry spokesperson Geng Shuang told reporters.

Reacting to Meng’s arrest, Huawei said in a statement it was unaware of any wrongdoing by its executive, adding it complies with all applicable laws.

“The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms Meng,” the company said.

‘Sense of angst’

After rallying on Monday following the US-China ceasefire on tariffs announced over the weekend, US markets fell sharply on Tuesday on scepticism about the agreement.

US markets were closed on Wednesday because of the funeral of former president George HW 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 US and China reaching a trade deal within their prescribed 90-day window”, said Briefing.com analyst Patrick O’Hare.

“Moreover, it has piqued worries that China could take some retaliatory action in the interim against US companies doing business in China,” said O’Hare.

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