The rising tensions between Washington and Beijing could become a more persistent headwind for markets, as the issue of China becomes a larger focus in the U.S. presidential election.

So far, the war of words between the countries over blame for the coronavirus, the U.S. crackdown on Huawei and now Chinese companies listing on American exchanges have not had a major impact on the Wall Street stocks. But in the last two sessions, the countries’ relationship has hung over the market, especially as China announced new security measures for Hong Kong on Friday and took the unusual step of withholding its GDP forecast because of the virus impact.

he U.S. this week also announced the sale of $180 million torpedoes to Taiwan, further aggravating the relationship with Beijing, which views Taiwan as part of greater China.

Global stock markets declined Friday and Hong Kong shares fell sharply as China’s poor economic outlook and the prospect of a new security crackdown by Beijing on Hong Kong stirred fears. Read More