European stocks fell, government bond yields slipped and the Japanese yen firmed on Thursday after the U.S. government hit Chinese telecoms giant Huawei with severe sanctions, further straining Sino-U.S. trade ties.
While benchmark indexes in China and Hong Kong were up between 0.3-0.8% at the close of trading, bond markets were signalling more pain for risk appetite. The move took global markets by surprise as sentiment had steadied somewhat in the previous session on news that U.S. President Donald Trump was planning to delay tariffs on auto imports after a swathe of weak U.S. and Chinese economic data.As trade tensions have made a reappearance on investors’ radars, weak U.S. data has also ratcheted up market expectations of a U.S. interest rate cut in the coming months.