Huawei executive Meng’s arrest sparks market turbulence
7 December 2018
The arrest of Huawei chief financial officer Meng Wanzhou in Canada at the request of the US Justice Department, which is seeking her extradition to the US to face charges that the high-tech Chinese communications firm traded with Iran in breach of US-imposed sanctions, sent share markets in Europe and Asia tumbling and produced major gyrations on Wall Street yesterday.
The wild day on Wall Street began when the futures market opened overnight and the CME Group that runs it halted trading for a brief period “due to volatility.”
When the trading began, the market plunged in the first two hours before a recovery later in the day which left the Dow marginally down by 80 points.
Earlier markets in Asia had fallen by between 2.5 percent and 3 percent on the news of the Meng arrest which threatens to render null and void any trade war ceasefire between the US and China. This was followed by similar falls in European markets which were down by around 3 percent. The European Stoxx 600 index was down by 3.1 percent—its worst one-day fall since Britain voted to leave the European Union in 2016. The UK’s FTSE index fell 3.2 percent, its worst day in two years.
The market turbulence then spread to Wall Street and late morning trade saw the Dow off by 784 points. Combined with the 800-point fall on Tuesday—the market was closed Wednesday due to the funeral of former President George H.W. Bush—this meant the market had experienced a 1,500-point slide in a day and a half.
And then, in an expression of the increased volatility of the past two months, the market began to rise following a report by the Wall Street Journal that the US Federal Reserve was considering whether to signal to…