U.S. stock index futures fell more than 1.5 percent on Thursday, as the arrest of a top executive of Chinese tech giant Huawei for extradition to the United States sparked fears of a flare-up in Sino-U.S. tensions, while sliding oil prices added to the pressure, Trend reports referring to Reuters.
The arrest of Huawei Technologies Co Ltd’s Chief Financial Officer Meng Wanzhouof in Canada triggered fresh doubts over the prospect of Washington and Beijing striking a deal in their 90-day truce period.
Investor worries that a protracted trade war would dent global growth were exacerbated on Tuesday by a drop in longer-dated U.S Treasury yields and culminated in Wall Street’s three major indexes closing down more than 3 percent.
Adding to those concerns on Thursday was a drop in oil prices after the Organization of the Petroleum Exporting Countries signaled it may agree to a smaller-than-expected cut in crude output.
“The indices are headed for another tumble as the previous steep sell-off extends itself on a host of negative news,” Peter Cardillo, chief market economist at Spartan Capital Securities, said in a client note.
“The arrest of Huawei CFO is putting in doubt the trade truce between the U.S. and China, while the Saudis propose a million barrels of oil output cuts with Russia still in limbo.”
At 7:15 a.m. ET, Dow e-minis 1YMc1 were down 400 points, or 1.6 percent. S&P 500 e-minis ESc1 were down 41.5 points, or 1.54 percent and Nasdaq 100 e-minis NQc1 were down 138.75 points, or 2.04 percent.
The losses in the first few minutes of trading might have been even steeper, but CME Group’s Chicago Mercantile Exchange implemented a series of 10-second trading halts that helped limit the initial drop.
Suppliers of Huawei, the world’s second-biggest smartphone maker and largest telecoms equipment maker, were among the bigger losers in premarket trading, with Intel Corp (INTC.O) dropping 2.8 percent and Qualcomm Inc (QCOM.O) falling 1.9 percent.
Shares of trade-sensitive bellwethers Caterpillar Inc (CAT.N) and Boeing Co (BA.N) dropped 2.6 percent and 3.1 percent, respectively, while oil majors Exxon Mobil (XOM.N) and Chevron (CVX.N) dropped about 1.5 percent.
The U.S. trade deficit widened to $55 billion in November, from $54 billion in October, data from the U.S. Commerce Department at 8:30 a.m. ET (1330 GMT) is expected to show.