World markets slumped Thursday as the arrest of a top executive at Chinese telecoms giant Huawei raised doubts over the recent trade truce agreed by US President Donald Trump and Chinese counterpart Xi Jinping.
Fears over the potential trade fallout saw the Frankfurt DAX index, London and Paris all shed three percent and Wall Street joined the global stocks sell-off, opening sharply lower as the Dow Jones Industrial Average slid 2.0 per cent.
The broad-based S&P 500 sank 1.9 per cent to 2,648.04, while the tech-rich Nasdaq Composite Index shed 2.2 per cent to 7,002.02 as Wall street returned to action. The US markets were closed Monday for the funeral of former president George H.W. Bush.
"After some semblance of tranquility on Wednesday, markets are in the thick of it as news regarding Chinese smartphone Company Huawei suggest that US-China tensions are well beyond the tit for tat tariff war," said Oanda's Stephen Innes.
On the foreign exchange markets, the pound held up despite Britain lurching toward a potential no-deal Brexit. Prime Minister Theresa May faces defeat in her bid to push a controversial agreement with the EU through parliament.
Trump and Xi had sparked a brief global markets rally on Monday after appearing to clinch a tariffs ceasefire last weekend in Buenos Aires.
But the rally ran out of steam with investors fretting over the fragile state of the world economy and Brexit uncertainty.
"US-China relations were on the mend after the G20 summit ... and now the arrest might have thrown a spanner in the works."
Meng is the daughter of company founder Ren Zhengfei, a former Chinese People's Liberation Army engineer. The company has been investigated by US intelligence, who deemed it a national security threat, and such concerns have been voiced elsewhere too.
China has expressed outrage, urging Canada and the US to "immediately correct the wrongdoing".
"Not only were miners in deep distress over the potential for another nosedive in US-China relations, but BP and Shell plunged 3.0-per cent apiece as Brent crude tumbled back under $60," Campbell noted.
"We're looking for a sufficient cut to balance the market, equally distributed between countries," Saudi oil minister Khalid al-Falih told reporters in remarks interpreted by some observers as overly cautious.
"But the early indications are that the size of the reduction may not be enough to halt the market's declines."
The Huawei news saw tech firms hammered on Asian markets.
Hong Kong-listed ZTE, hit by a US banning order over security fears this year before that was reduced to a massive fine, was almost six percent down.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)