After flitting between gains and losses in early trading, stocks on Wall Street moved sharply lower following news of the delay. The S&P 500 was down more than 1.5 percent by midmorning. Stocks in Europe were also lower, with the FTSE 100 in London giving up gains to end trading down about 0.7 percent, and shares in Germany fell 1.5 percent. Markets in Asia had also tumbled earlier.

Wall Street is in a tailspin, with uncertainty about corporate profits and the health of the U.S. economy mounting as interest rates rise and the trade war with China grinds on.

Although stocks have been falling since late September, the emergence of a new flash point in U.S.-China relations — the arrest a prominent Chinese technology executive — seemed to raise the stakes for investors last week. Stocks swung wildly Thursday and Friday, and ended the week having erased all their gains for 2018.

Export-based economies have started to struggle. On Monday, Japan reported revised economic figures that 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 are a sign of weaker growth 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 U.S. 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 U.S. officials of sanctions fraud involving Iran. Her detention coincided with an important meeting between President Xi Jinping of China and President Donald 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 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 yuan, 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.

The New York Times

Alexandra Stevenson © 2018 The New York Times