Stocks fall as Nancy Pelosi visits Taiwan

• Tuesday saw a decline in stock prices around the world.
• The DAX (DAX) in Germany and the CAC 40 (CAC40) in France both had declines of 0.3 percent and 0.4 percent.
• The Japanese yen, a traditional safe-haven currency, rose 0.6 percent against the US dollar.

Tuesday saw a decline in stock prices around the world as investors worried that US House Speaker Nancy Pelosi’s trip to Taiwan might sharply exacerbate tensions with China.

As investors considered the market repercussions of the trip, US and European markets declined alongside Asian indices.

• Shanghai Composite Index (SHCOMP) on mainland China finished lower by 2.3 percent, while the Hang Seng Index (HSI) in Hong Kong dropped by 2.4 percent.
• The FTSE 100 (UKX) in London was unchanged, but the DAX (DAX) in Germany and the CAC 40 (CAC40) in France both had declines of 0.3 percent and 0.4 percent, respectively.
• The Japanese yen, a traditional safe-haven currency, rose 0.6 percent against the US dollar.
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• All three major US stock indexes opened lower.

Tuesday evening local time saw Pelosi arrive in Taipei, making her the first House speaker to do there in 25 years. She is travelling despite the Biden administration’s advice against a visit in Taiwan and at a time when US-China relations are at an all-time low.

Beijing warned of the “egregious political repercussions” of her travel to Taiwan, which it asserts is a part of its territory, before she arrived. China’s military “won’t sit by silently,” according to a spokesman for the foreign ministry, if Beijing considers that its “sovereignty and territorial integrity” are in danger.

Stephen Innes, managing partner at SPI Asset Management, stated on Tuesday that “Pelosi’s visit to Taiwan is tainting sentiment today.” Investors are pouring money into US Treasuries despite rising tensions in the Taiwan Strait and growing concerns about a worldwide economic recession.

No one wants a real conflict, but there is a chance for accident or even active war game escalation, which might always result in a tactical error, the speaker stated.

In a statement released on Tuesday, Pelosi and the congressional delegation that was with her said the visit “honors America’s unshakable commitment to supporting Taiwan’s thriving democracy.”

Analysts predicted that the Chinese yuan and Taiwan dollar will continue to deteriorate over the next few days.

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