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By Shreyashi Sanyal
(Reuters) – U.S. stocks were set to tumble 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.
The arrest of Huawei Technologies Co Ltd’s Chief Financial Officer Meng Wanzhouof in Canada cast fresh doubts over the prospect of Washington and Beijing striking a deal in their 90-day truce period.
Fears that a protracted trade war would dent global growth were exacerbated by a drop in longer-dated U.S Treasury yields on Tuesday that 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.
“In general, we all have the same questions we did on Tuesday,” said Art Hogan, chief market strategist at B. Riley FBR in New York. “The news on Huawei throws another level of uncertainty on our ability to actually come to some agreement with China.”
Data showed that the U.S. trade deficit jumped to a 10-year high in October, suggesting the Trump administration’s tariff-related measures to shrink the trade gap were ineffective.
At 8:26 a.m. ET, Dow e-minis were down 374 points, or 1.49 percent. S&P 500 e-minis
Suppliers of Huawei, a smartphone and telecoms equipment maker, were among the bigger losers in premarket trading, with Intel Corp (NASDAQ: INTC) dropping 2.1 percent and Qualcomm Inc (NASDAQ: QCOM) falling 1.1 percent.
Research firm Bernstein noted that Huawei is one of the largest buyers of semiconductors. Chip makers and chip equipment makers slid with Lam Research Corp (NASDAQ: LRCX), Advanced Micro Devices Inc (NASDAQ: AMD) and Micron Technology Inc (NASDAQ: MU) down between 2.8 percent and 3.8 percent.
Shares of trade-sensitive bellwethers Caterpillar Inc (NYSE: CAT) and Boeing Co (NYSE: BA) dropped 2.5 percent and 3.2 percent, respectively, while oil majors Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) dropped about 1.5 percent.
Shares of Kroger Co (NYSE: KR) fell 1.4 percent after the supermarket chain’s quarterly same-store sales missed estimates.
(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty)