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US markets slump, treasuries gain as sell-off resumes

US markets slump, treasuries gain as sell-off resumes
US stocks slumped at the start of US trading, following European and Asian shares lower, as concern resurfaced that trade tensions between the world’s two largest economies are far from resolved. Photo: Bloomberg

London/New York: Stocks slumped at the start of US trading, following European and Asian shares lower, as concern resurfaced that trade tensions between the world’s two largest economies are far from resolved. Oil slid as OPEC ministers met in Vienna.

The Dow Jones Industrial Average sank more than 400 points, while S&P 500 resumed its slide after one of the biggest routs of the year. Trade tensions reignited after the arrest of the chief financial officer of tech giant Huawei Technologies Co. -- dousing hope China and the US would make immediate progress on a deal. The yuan dropped the most since October. The start of the futures session was marred by a sudden and unexpected plunge that sent a shock wave across equity markets.

“The biggest qualm is the trade war escalating and this is haunting the markets,” said Naeem Aslam, chief market analyst at Think Markets UK in London, in an email. “It is arduous to find bulls in the market and it seems to me that this game is about to become uglier.”

Whether or not it triggered the slide, Canada’s arrest of the Huawei CFO and reports it may extradite her to the US are a blow to already fragile sentiment, just days after an apparent breakthrough on trade between America and China.

“The arrest of the Huawei Technologies CFO gives no confidence that anything the administration came back with after Saturday night’s dinner could possibly be positive,” said Bob Iaccino, chief market strategist at Chicago-based Path Trading Partners, in an email. “This is a huge negative.”

Elsewhere, Bank of Japan Governor Haruhiko Kuroda said economic risks from abroad could be severe, and the Federal Reserve’s Beige Book report showed fading optimism over growth prospects at US firms even as most districts continued to report a modest expansion. The pound strengthened as UK Prime Minister Theresa May searched for a compromise to avoid a crushing defeat on her Brexit deal in a key vote in Parliament next week.

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