The Dow Jones industrial average suffered another steep drop Monday, following on an ugly week of losses. (Spencer Platt/Getty Images)
U.S. markets deepened their losses Monday as Britain’s political crisis around Brexit clouded investors’ outlook. British Prime Minister Theresa May put off a key parliamentary vote on her country’s exit from the European Union.
Investors are also on edge about developments in the U.S.-China trade dispute.
The Dow Jones industrial average dropped more than 500 points — or 2 percent — in morning trading, dragged lower by banks and Apple. The iPhone maker was ordered by a Chinese court to stop selling some of its late-model phones in the country after a ruling that it had infringed on patents held by Qualcomm.
Kenny Polcari of ButcherJoseph Asset Management said the latest brouhaha over Brexit piles on to the worries that have beset markets in recent weeks.
“The market has been focusing on all the negative stories,” Polcari said. “As long as the tone is negative, any negative story is going to cause a market overreaction. Brexit is certainly one of them. All of a sudden, Brexit has hit a real speed bump. That’s what’s going on.”
Tensions over the U.S.-China trade dispute pitched higher over the weekend, too. U.S. Trade Representative Robert Lighthizer said Sunday on “Face the Nation” that March 1 is “a hard deadline” to reach a deal.
“The way this is set up is that at the end of 90 days, these tariffs will be raised,” he said. “If [a deal] can be done, the president wants us to do it. If not, we’ll have tariffs.”
Another flash point in the U.S.-China trade relationship was the arrest last week of Meng Wanshou, the chief financial officer of China’s Huawei Technologies. Meng was detained Dec. 1 in Vancouver, Canada. The United States wants to extradite Meng on charges of violating U.S. sanctions on Iran.
Lighthizer attempted to separate the trade debate from the arrest, calling it “a criminal justice matter.” But it has darkened the cloud over trade talks.
China has demanded Meng’s release, and has summoned the U.S. Ambassador Terry Branstad to China to register its unhappiness with the arrest. The Chinese government has also threatened “further actions” on the matter, according to a posting on a Chinese government website.
JPMorgan Chase was down nearly 3 percent Monday, followed by American Express down 2.3 percent and Goldman Sachs down 2 percent.
The Standard & Poor’s 500-stock index fell 1.8 percent and Nasdaq Composite down 1.2 percent.
The declines follow a miserable week that saw all three major indexes drop by more than 4.5 percent. Both the Dow and S&P 500 are in negative territory for 2018. The Nasdaq is barely treading positive for the year, up about one half a percent in mid-day Monday trades.
British Prime Minister Theresa May on Monday postponed a crucial parliamentary vote on her government’s Brexit legislation. Her announcement comes just months before the British are scheduled to leave the European Union and has thrown her government into disarray.
Uncertainty surrounding Britain’s exit from the European Union has roiled the economies of Europe and Britain.
The British Pound dropped 1.8 percent Monday, which is the currency’s lowest level since April 2017.
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