Nancy Pelosi’s Taiwan Trip Sends Stocks Down

US and European stocks trailed Asian indices lower as investors weighed the market implications of the trip.

Pelosi landed in Taipei Tuesday night local time, becoming the first House Speaker to visit the island in 25 years. Her trip comes at a low point in US-China relations and despite warnings from the Biden administration against a stopover in Taiwan.

Before his arrival, Beijing warned of the “appalling political impact” of his visit to Taiwan, which China claims as part of its territory. A Foreign Ministry spokesman said China’s military “will not sit idly by” if Beijing feels its “sovereignty and territorial integrity” are being threatened.

“Pelosi’s visit to Taiwan is polluting sentiment today,” Stephen Innes, managing partner at SPI Asset Management, said on Tuesday. “And amid rising tensions across the Taiwan Strait and deepening concerns about a global economic slowdown, investors are diving headfirst into US bonds.”

“No party wants a real war, but the risk of setbacks or even aggressive escalation of the war game is real, which could always lead to tactical error,” he said.

Pelosi's long-awaited visit to Taiwan risks creating further instability between the US and China

Pelosi and the congressional delegation that accompanied her said in a statement Tuesday that the visit “honors the United States’ unwavering commitment to supporting Taiwan’s vibrant democracy.”

Analysts said they expected to see further weakness in the Chinese yuan and Taiwanese dollar in the coming days.

CNN’s Eric Cheung, Kylie Atwood, Alex Rogers and Kevin Liptak contributed to this report.

Leave a Comment