Shares on the US stock market plunged during the final hour of trading on Wall Street following the news Donald Trump will make an announcement on China on Friday. Stockbrokers on Wall Street saw earlier gains wiped-out as investors began selling stocks amid the growing uncertainty in global financial markets.
Tensions between the US and China – the two largest economies in the world – have soared in recent days amid a growing dispute over Hong Kong.
The Dow Jones Industrial Average closed down 147.63 points, or 0.58 percent, to 25,400.64.
The Dow Jones measures the stock performance of the 30 largest companies on the New York Stock Exchange.
The S&P 500 also posted loses and was down 6.4 points, or 0.21 percent, to 3,029.73.
The S&P 500 is one of key market indicators and measures the stock performance of 500 large companies in the US.
Meanwhile the Nasdaq Composite dropped 43.37 points, or 0.46 percent, to 9,368.99.
The Nasdaq Composite is the key indicator of leading IT firms in the US.
Technology giants Facebook and Twitter also saw its shares tumble after the US President said he would sign an executive order related to social media companies.
Shares of Twitter Inc ended down 4.4 percent and Facebook Inc fell 1.6 percent.
Mr Trump confirmed he was directing Attorney General William Barr to work with states to enforce their own laws social media companies.
The US dollar also fell to a two-month low against the euro.
Tensions between the Washington and Beijing have increased after China made a move to gain more control over former British colony Hong Kong.
China’s ceremonial legislature, the National People’s Congreass, endorsed a security law for Hong Kong which would give the Chinese government powers to enforce its own measures.
US Secretary of State Mike Pompeo told Congress on Wednesday that China has undermined Hong Kong’s autonomy so fundamentally that the Asian financial centre no longer qualifies for its special status under US.
Just last year the US and China embarked on a trade war and the US President could take a variety of punishing measures, including imposing tariffs, limiting visas and other economic penalties.
Mr Pompeo along with the Foreign Secretary’s from the UK, Australia, Canada have urged China to work with the government of Hong Kong to find a “mutually acceptable accommodation that will honour China’s international obligations” under the Joint Declaration.
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They wrote: “China’s decision to impose the new national security law on Hong Kong lies in direct conflict with its international obligations under the principles of the legally-binding, UN-registered Sino-British Joint Declaration.
“The proposed law would undermine the One Country, Two Systems framework.
“It also raises the prospect of prosecution in Hong Kong for political crimes, and undermines existing commitments to protect the rights of Hong Kong people – including those set out in the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights.
“We are also extremely concerned that this action will exacerbate the existing deep divisions in Hong Kong society; the law does nothing to build mutual understanding and foster reconciliation within Hong Kong.”