Asian markets were knocked sideways by the arrest of a senior Huawei official in Canada as the move sparked fears that tensions between the US and China would yet again intensify. FTSE, European gauges and Dow futures were also not spared with the heavily export-oriented DAX losing 1.5%.
Tech stocks in Asia were the hardest hit, in particular Samsung (LON:0593xq), Tokyo Electron (T:8035), TDK (T:6762) and Tencent (HK:0700), pulling down Asian indexes.
The US already has a low-key conflict simmering with the Chinese tech giant and has, alongside New Zealand, already blocked Huawei from selling their 5G technology in the country for fear that it could be used for malicious purposes.
The latest arrest will be seen as a heavy slap in the face in China as the arrested executive, Meng Wanzhou, is the company’s CFO and the daughter of Huawei’s founder. She was detained in Canada and could end up being extradited to the US as the company is suspected of breaching sanctions against Iran.
Euro sanguine over German manufacturing
Although the US trade frictions with the EU and with China were expected to have a negative effect on the German economy, so far the country’s manufacturing is holding up surprisingly well. Factory orders in October have increased for a third month against overall expectations of a fall. The common currency was little changed against all the major currencies.
Thepound was also fairly flat, giving a minute bit of ground to the dollar.
OPEC Plus
Oil ministers of OPEC members are meeting in Vienna Thursday to discuss potential production cuts that would slow the current price decline. A group of 10 other countries led by Russia will join the discussions on Friday in what is called the OPEC-Plus countries.
The producers broadly agree that a production cut should be put in place, roughly on the scale of 1% of the global production; details of when, where and by how much are still missing however.
While the oil price has dropped substantially since the beginning of October what is often forgotten is that by that stage markets had been whipped into a frenzy ahead of the pending Iran sanctions. Once the froth subsided, markets were left with a slightly more realistic price. OPEC ministers will be aware of that and may provide the market with a slightly lower cut than it expects at this stage.
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