Huawei's CFO was arrested for allegedly breaching Iran 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.
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.