US, global stock markets fall amid heightened US-China tensions
- US markets are jittery after Asian stocks tumbled overnight; chip makers take a hit
- After Beijing announces live-fire exercises around Taiwan, experts say possible economic retaliation could lead to ‘unfavourable spillbacks for China’
US stock indexes slipped on Tuesday as investors weighed the repercussions of heightened tensions between the US and China over US House Speaker Nancy Pelosi’s visit to Taiwan, a major supplier of the world’s semiconductors.
Taiwanese chip companies tumbled, with shares of Taiwan Semiconductor Manufacturing (TSMC) and United Microelectronic slipping by 2.4 per cent and 3 per cent respectively.
US semiconductor stocks such as Nvidia, Intel, Qualcomm and Micron Technology each fell more than 1 per cent. Germany’s Infineon lost 2.3 per cent, while Dutch firms ASML, ASMI and BESI slumped between 3 and 4 per cent.
Overall, the S&P 500, which tracks the performance of the top 500 companies listed in the US, dropped by 0.67 per cent to 4,091.19. The benchmark briefly bounced back after Pelosi’s plane touched down safely, only to return to red figures.
The tech-dominated Nasdaq shed 0.16 per cent to 12,348.76. The blue-chip Dow Jones spent the day in red, losing 402.23 points or 1.23 per cent.
Mohamed El-Erian, chief economic adviser at the financial services giant Allianz, ascribed the fluctuations partly to the uncertainty associated with the latest geopolitical theatrics between Beijing and Washington.
“There is a lot of speculation on whether and how China would respond to what officials there said they would view as a provocation were [Pelosi] to visit Taiwan,” he said, adding that any financial or economic retaliation by China that affects demand and the supply side could “involve unfavourable spillbacks to China” as it faces “considerable economic and financial uncertainties”.