European stocks look set to open sharply lower on Thursday amid heightened trade tensions after Huawei Technologies Co.’s chief financial officer Wanzhou Meng was arrested in Canada over potential violations of U.S. sanctions on Iran.
She is facing extradition to the U.S., a move that will likely escalate trade tensions between the United States and China. Her detention also raises more questions about the Trump administration’s overall China strategy.
Asian shares slumped alongside the U.S. index futures and safe-haven assets such as gold and the yen climbed amid a spike in risk aversion.
The U.S. Federal Reserve said in a report that it is concerned about higher tariffs from a widening trade war, rising interest rates and tight labor markets.
Elsewhere, Bank of Japan Governor Haruhiko Kuroda said economic risks from abroad could be severe and the central bank would respond appropriately as needed.
Meanwhile, ahead of next week’s key parliamentary vote on Brexit, U.K. Prime Minister Theresa May is struggling to keep the deal on track.
Oil prices fell along with weak stock markets as investors await the outcome of a meeting by producer group OPEC later in the day.
U.S. markets remained closed overnight due to a national day of mourning for former U.S. President George H.W. Bush.
European markets fell sharply on Wednesday, with fears of economic slowdown, confusion over the U.S.-China trade ‘truce and Brexit-related uncertainty weighing on markets.
The pan-European Stoxx Europe 600 index shed 1.2 percent. The German DAX also lost 1.2 percent, while France’s CAC 40 index and the U.K.’s FTSE 100 declined 1.4 percent.
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