A sell-off in North American stock markets intensified on Monday afternoon, led by a decline in technology stocks, after reports that U.S. officials were in the process of introducing restrictions that would block Chinese companies from investing in U.S. tech companies.
Reports on Sunday said the U.S. Treasury Department was working on restrictions that would block companies with at least 25 per cent Chinese ownership from buying U.S. tech companies.
Treasury Secretary Steven Mnuchin tweeted that the curbs would apply “to all countries that are trying to steal our technology,” not just China.
On behalf of <a href=”https://twitter.com/realDonaldTrump?ref_src=twsrc%5Etfw”>@realDonaldTrump</a>, the stories on investment restrictions in Bloomberg & WSJ are false, fake news. The leaker either doesn’t exist or know the subject very well. Statement will be out not specific to China, but to all countries that are trying to steal our technology.
The tech-heavy Nasdaq composite fell 2.8 per cent to 7,480.04 points, while the Dow Jones industrial average slumped 1.9 per cent or 436 points to 24,117.58 points.
In Canada, the S&P/TSX composite index was down 1.5 per cent to 16,200.99 points, with the information technology sector the biggest drag on the benchmark index.
Karl Schamotta, director of market strategy at Cambridge Global Payments, said that even though the actions by the U.S. administration and retaliating countries “occupy a diminishingly small niche in the flow of global trade,” they are having important psychological effects.
“Businesses are becoming increasingly cautious. A number of major corporations (including Harley-Davidson) have announced plans to move production outside the United States, equity markets have come under pressure, and trade sentiment surveys have turned down on a global basis,” Schamotta said in a note.
Shares of Harley-Davidson fell more than seven per cent after the motorcycle maker said it would move production of motorcycles shipped to the European Union from the U.S. to its international factories.
The company said the EU’s retaliatory tariffs against the U.S. would cost it $90 million US to $100 million US a year.
Commodities and currencies
Meanwhile, oil prices also took a tumble with West Texas Intermediate crude oil in New York down 0.67 cents to $67.88 US.
Top oil producers Russia and Saudi Arabia renewed their vow to boost production, putting pressure on prices.
The shutdown for maintenance of Alberta’s oilsands Syncrude plant, which turns heavy crude oil into light oil for U.S. markets, added to worries about a supply shortage in the market.
Shares of Suncor Energy, which controls the plant, were down more than three per cent in listings in New York and Toronto.
The Canadian dollar was down against its U.S. counterpart, trading at 0.7518 cents US.