Stock markets around world slid on Thursday as the arrest of a top Chinese technology executive cast further shadows on U.S.-China trade relations, while oil prices sank after OPEC delayed an output decision.
The arrest of smartphone maker Huawei Technologies Co. Chief Financial Officer Meng Wanzhou in Canada for extradition to the United States came as Washington and Beijing prepared for talks aimed at resolving a bitter trade spat.
Sources familiar with the probe told Reuters Meng was arrested as part of a U.S. investigation of an alleged scheme to use the global banking system to evade U.S. sanctions against Iran.
The S&P 500 and Dow industrials ended slightly negative but well above their session lows in volatile trading on Thursday, while some big technology and Internet shares posted gains.
The Dow Jones Industrial Average fell 78.05 points, or 0.31 percent, to 24,949.02, the S&P 500 lost 4.1 points, or 0.15 per cent, to 2,695.96 and the Nasdaq Composite added 29.83 points, or 0.42 per cent, to 7,188.26.
Canada’s main stock index plunged to its lowest level in more than two weeks on Thursday, as oil prices pulled down energy shares, while the Bank of Canada Governor Stephen Poloz predicted that low oil prices would hurt the country’s economic growth.
Comments from Poloz are likely to reinforce market expectations that the pace of future rate hikes will ease off, a day after the central bank kept interest rates on hold.
Thee Toronto Stock Exchange’s S&P/TSX composite index was unofficially down 245.64 points, or 1.62 per cent, at 14,906.82.
The losses were broad-based with seven of the index’s 11 major sectors in the red, with the energy sector’s 5.4-per-cent slump leading the decliners.
Oil tumbled in a volatile session after OPEC signaled it may agree to a smaller-than-expected output cut.
Suncor Energy Corp. lost 6.7 per cent, while Encana Corp. and Canadian Natural Resources Ltd. dropped 5.9 per cent and 5.6 per cent, respectively.
The financials sector slipped 1.7 per cent, while the industrials sector fell 1.9 per cent.
Manulife Financial Corp. lost 4.2 per cent and Sun Life Financial Corp. finished down 3.9 per cent. Toronto-Dominion Bank and Royal Bank of Canada declined 2.1 per cent and 1.9 per cent, respectively.
The materials sector, which includes precious and base metals miners and fertilizer companies, lost 1.1 per cent.
Marijuana producers led a 6.6-per-cent increased in health care stocks. Aphria Inc. jumped 51 per cent, while Aurora Cannabis Inc. and Canopy Growth Corp. rose 13.5 per cent and 7.6 per cent, respectively.
Lagging shares included Dollarama Inc., down 11.8 per cent and Canada Goose Holdings Inc., down 8.5 per cent.
The pan-European STOXX 600 index lost 3.09 per cent and MSCI’s gauge of stocks across the globe shed 1.68 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.08 per cent lower, while Japan’s Nikkei lost 1.91 per cent.
“Clearly, the Huawei CFO arrest was the individual catalyst that caused today’s moves lower,” said Mark Hackett, chief of investment research at Nationwide.
Canadian authorities late on Wednesday said they had arrested Meng, also the daughter of Huawei’s founder, on Dec. 1, the same day that U.S. President Donald Trump and Chinese leader Xi Jinping met at the G20 summit in Argentina.
The world’s two economic superpowers had agreed on a 90-day trade truce period to hammer out a more permanent agreement, which sent global stock markets soaring on Monday. Equities reversed course the next day as uncertainty grew that the world’s two largest economies could, in fact, find common ground.
“The potential slowdown in global growth is also something the markets are pricing in,” said Art Hogan, chief market strategist at B. Riley FBR in New York.
Earlier this week, shorter-dated yields rose above medium-dated yields for the first time since early 2008, which fanned fears about a U.S. recession in the coming months and also sent Wall Street shares sliding.
U.S. Treasury yields pared some of the decline as Wall Street trimmed losses after flailing early in the day, with 10-year yields hitting three-month lows as worries about U.S.-China trade and Brexit spurred safe-haven bids.
Additionally, traders scaled back expectations on the number of rate hikes the Federal Reserve would implement amid weakening economic data and market volatility.
U.S. jobs data is due on Friday. If the figures show any serious weakness, markets are likely to react, said Shuji Shirota, HSBC’s head of macro economic strategy.
The U.S. dollar fell against major peers on lower Treasury yields and as traders scaled back rate hike expectations.
The euro was 0.32 per cent higher against the dollar at $1.1380.
Gold prices, which move inversely with the dollar, held near a five-month peak as the greenback and equities slipped.
Oil prices fell about 3 per cent in choppy trading after the Organization of the Petroleum Exporting Countries ended a meeting without making a decision on crude output.
OPEC met in Vienna to decide on production policy in coordination with other countries, including Russia, Oman and Kazakhstan. The organization said it had agreed on a tentative deal to cut oil output but had not yet come up with a final figure.
U.S. crude settled down 2.65 per cent at $51.49 per barrel and Brent was last at $60.06, down 2.44 per cent on the day.