Stocks fall as a result of the Chinese telecom ban and a downgrade in German growth.
Stock markets fell on Wednesday, with tech businesses in the crosshairs after China Telecom was barred from the US, while Germany’s economic projection was downgraded, weighing on morale.
Traders were mainly unimpressed by the Dow and S&P 500 closing at new all-time highs on Tuesday.
On anticipation of growing demand and concerns over supplies, oil markets fell Wednesday but stayed near multi-year highs.
In recent weeks, a solid corporate results season has provided much-needed support to investors, as corporations demonstrated resilience in the face of supply disruptions, rising commodity and wage prices, and rising Covid-19 cases.
Long-standing tensions between Washington and Beijing, however, continue to cast a pall over trading floors, with the two sides stuck in a standoff on a variety of topics including Taiwan, national security, technology, trade, and Hong Kong.
Also on the horizon A UK government budget update is scheduled for Wednesday as the country attempts to reduce its deficit, which grew dramatically during the pandemic.
The government will revise its estimates for UK economic growth with its tax and spending plans, many of which have been leaked ahead of the budget statement at 1130 GMT, with investors expecting for better news than Germany.
The German government forecasts that Europe’s largest economy will grow by roughly 2.6 percent this year, a slower-than-expected recovery from a pandemic-induced downturn last year, owing to bottlenecks in global supply networks.
As the economy recovers and inflation rises, all eyes will be on the European Central Bank on Thursday when it releases its monetary policy update, amid expectations that major central banks will begin tapering their massive cash stimulus injections and raising interest rates before the end of the year.
The tech sector was also in the spotlight after the US Federal Communications Commission on Tuesday revoked China Telecom’s US operating license, citing “significant national security and law enforcement risks.”
The move follows former US President Donald Trump’s crackdown on other tech giants such as Huawei and China Mobile.
It “looks to undermine previous optimism that US-China relations may be improving,” according to IG Asia’s Jun Rong Yeap.
The remainder of Asia was also in the red, as a faster-than-expected increase in Australian core inflation added to widespread concerns about rising global costs.
Investors are also keeping an eye on the property crisis in China, where some developers are struggling to satisfy their loan obligations. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.