A sell-off across Asian and European markets on Monday risked setting a gloomy tone for the week, as more negative news highlighted a slowdown in global growth and rising trade tensions between the United States and China.
Major markets from Tokyo to Hong Kong and Shanghai finished the day lower, with losses greater than 1 percent in many of them. In Germany, stocks fell to a two-year low at the start of trading. Futures that predict Wall Street’s opening suggested investors in the United States could face another volatile day.
While the drops in Asia and Europe were moderate, they reflected mounting signs that growth is slowing around the world.
In Japan, revised economic figures showed the country’s economy shrank more in the third quarter than initially reported. In China, trade data released over the weekend revealed a sharp slowdown in November. The lower-than-expected numbers indicate growth weakness and the growing impact of the trade war on China’s domestic economy, according to analysts at UBS, the Swiss bank.
“We still expect a sharp deceleration of Chinese exports in 2019, which would continue to be the biggest headwind for China’s economic outlook,” UBS said in a note to clients.
Technology stocks in Asia continued to suffer following the arrest more than a week ago of a senior executive at Huawei, the Chinese telecommunications giant. The arrest, which was publicly disclosed last week, suggested an escalation of trade tensions between the United States and China.
Over the weekend, China summoned Terry Branstad, the United States ambassador, to protest the arrest of Meng Wanzhou, Huawei’s chief financial officer, who was detained in Canada on Dec. 1 and has been accused by American officials of sanctions fraud involving Iran. Her detention coincided with an important meeting between President Xi Jinping of China and President Trump during which the two agreed to a 90-day truce in the trade war.
The Communist Party’s official newspaper warned over the weekend of “serious consequences” for the Canadian government, which arrested Ms. Meng while she was changing planes in Vancouver.
Technology stocks were among the worst hit, and in Hong Kong and Shenzhen they helped to drag the market down more than 1 percent. In Shanghai, the market lost nearly 1 percent. The Shanghai market is now down 22 percent so far this year.
The renminbi, China’s tightly managed currency which trades within a band set by policymakers, weakened 0.5 percent against the dollar.
Japan’s market dropped 2 percent, while in South Korea stocks were down by 1 percent. India and Taiwan were also hard hit, and Australia’s market lost more than 2 percent.
Markets were also down in early trading in Europe. In Frankfurt, the market dropped to its lowest in two years as investors digested the news on trade and uncertainty over Britain’s decision to leave the European Union.