CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

US Futures fall upon Huawei’s CFO arrest, Trade tensions rise

US stock futures fell dramatically on Thursday after news broke that Huawei’s CFO had been arrested in Canada and could be extradited back to the US.

US Futures fall upon Huawei’s CFO arrest

Huawei was arrested for allegedly breaching sanctions, which analysts say is likely to escalate tensions between the US and China over technology issues.

CFO, Wanzhou Meng, and deputy chairwoman of Huawei Technologies Co was arrested in Vancouver on December 1st, after American authorities investigated the tech company for allegedly violating Iran sanctions.

A spokesman for Canada’s Justice Department said “She [Meng] is sought for extradition by the United States, and a bail hearing has been set for Friday,”

Analysts say in the short-term the Huawei arrest has impacted US futures dramatically, but question if the fears will continue in the long-term.

The crash comes after Wall St was down overnight on Wednesday, after plunging 800 points in a single trading day.

The fall sparked fears of an economic slowdown, and analysts say Wall Street and the US dollar struggled because of the inversion of the yield curve.

Volatility in the markets continued in Thursday morning trade, as investors were still anxious after the previous session’s dramatic sell-off overnight.

Market Price

While US markets were closed on Wednesday to mark the death of former President George H.W. Bush, US futures were in a tailspin upon the CFO arrest news, and analysts predict more dramatic falls when the US market re-opens.

S&P futures went from 0.5% to 1.5% and at time of writing down to 0.65%.

AUD/USD fell to 0.7259 steading around 0.7265

S&P 500 e-mini futures were down almost 2% with volume at 31,146 contracts.

Australian shares were down 0.3%

Futures pointed to a fall of 0.4% in Japan’s Nikkei.

The Euro traded flat at $1.1347

Huwaei and US conflict.

Huawei is one of China’s biggest makers of telecom networking equipment and phones. The company has long faced issues with the US, as Washington expressed concern about their telecommunications equipment, flagging a possible security threat to the US.

Huwaei has been under investigation for breaking American trade controls to countries like Iran, and Saudi Arabia.

Analysts believe this information has taken its toll on Wall Street, causing pressure on US futures. They predict the short-term crash won’t last long and should bounce back when the dust settles around the CFO's arrest.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Find articles by writer