S&P futures slumped on Wednesday and European stocks fell after Washington ordered a shutdown of the Chinese consulate in Houston, citing a need to protect American intellectual property and information, amid a sharp deterioration in relations between the two countries (at least we now know why the Houston consulate was furiously burning all of its documents late on Tuesday). The State Department later said the order was to protect intellectual property and “private information” of Americans. Beijing in return vowed to “react with firm countermeasures”, and was reportedly considering the closure of the US consulate in Wuhan (of all places) escalating tensions between the world’s two largest economies and adding to concerns over the deteriorating relationship between the economic superpowers. Yields and the yuan fell, Hong Kong shares dropped and gold and silver dipped after soaring overnight on continued dollar weakness.
The U.S. Department of State confirmed the impending closure of the Houston consulate, after China’s foreign ministry reported it had been told to shut the mission. The closure had been ordered “in order to protect American intellectual property and American’s private information”, State Department Morgan Ortagus said in a statement.