US Secretary of State Mike Pompeo accused Huawei of being dishonest about its links with China’s Government. (Gage Skidmore/flickr.com/CC BY-SA 2.0)
Australian shares are expected to drop at the open as global markets sank on lingering US-China tensions.
Market snapshot at 7:50am (AEST):
- ASX SPI futures -0.4pc at 6,464, ASX 200 (Thursday’s close) -0.3pc at 6,492
- AUD: 69 US cents, 54.5 British pence, 61.68 euro cents, 75.64 Japanese yen, $NZ1.06
- US: Dow Jones -1.1pc at 25,490, S&P 500 -1.2pc at 2,822, Nasdaq -1.6pc at 7,628
- Europe: FTSE 100 -1.4pc at 7,231, DAX -1.8pc 11,952, CAC -1.8pc at 5,281, Euro Stoxx 50 -1.8pc at 3,327
- Commodities: Brent crude -4.2pc at $US68.02/barrel, spot gold +0.8pc at $US1,283.05/ounce
At 7:14am (AEST), ASX futures were implying a fall of about 0.5 per cent in early trade.
The Australian dollar has risen slightly to 69 US cents.
On Wall Street, the Dow Jones index fell 286 points, or 1.1 per cent, to 25,490.
In the past two days, the Dow has lost more than 380 points as investors realise the US-China trade war may last much longer than expected.
The broader S&P 500 and tech-heavy Nasdaq dropped 1.2 and 1.6 per cent respectively, but oil prices were the biggest casualty of the sell-off.
Brent crude oil tumbled 4.3 per cent to $US67.92 a barrel on fears the protracted trade dispute may weaken global demand for fuel.
Adding to the downbeat mood in markets, data from IHS Markit showed US manufacturing faltered in May, with new orders falling for the first time since August 2009.
“We’re going to see a drift lower until there’s a resolution of what’s happening with China,” said Jamie Cox, managing partner at Harris Financial Group.
“If you’re trading, it’s not a bad idea to put yourself on the sidelines and sit it out.”
Huawei not ‘telling the truth’, says US
The United States and China had a heated exchange on Thursday (US time), with US Secretary of State Mike Pompeo accusing telecom giant Huawei Technologies of lying about its ties with the Chinese Government.
“For them to say that they don’t work with the Chinese Government is false,” Mr Pompeo said in an interview with CNBC.
“The Huawei CEO on that, at least, isn’t telling the American people the truth.
“The company is deeply tied not only to China, but to the Chinese Communist Party.
“If you put your information in the hands of the Chinese Communist Party, it’s de facto a real risk to you.
“They may not use it today, they may not use it tomorrow.”
Mr Pompeo also confirmed media reports that China was using high-tech surveillance to set up an intrusive policing effort — which could be used to subdue its minority groups, including ethnic Muslim Uyghurs in Xinjiang.
The United States is considering Huawei-like sanctions on Chinese video surveillance firm Hikvision Digital Technology over the issue, a person briefed on the matter said.
China’s Commerce Ministry spokesman Gao Feng hit back, saying: “If the United States wants to continue trade talks, they should show sincerity and correct their wrong actions.
“Negotiations can only continue on the basis of equality and mutual respect.”
Huawei has repeatedly denied it is controlled by the Chinese Government, military or intelligence services.
Citing national security concerns, Washington last week effectively banned US firms from doing business with Huawei.
But earlier this week, it temporarily granted Huawei a licence to buy US goods — until August 19 — to minimise disruption for customers.
No trade talks have been scheduled since the last round ended on May 10, when US President Donald Trump hiked tariffs on $US200 billion worth of Chinese goods and took steps to impose more, prompting China to respond with levies of its own.