US Speaker of the House of Representatives, Nancy Pelosi, arrives in Taiwan in a visit that has angered Beijing and stirred up a new crisis in US-China relations

New York (AFP) - Stock markets fell Tuesday as investors dumped equities amid escalating China-US tensions while digesting hawkish comments from US central bankers that lifted US Treasury yields.

Investors monitored US House Speaker Nancy Pelosi’s movements as she landed uneventfully in Taiwan in the widely-anticipated stop on the trip that has angered China.

Pelosi, second in line to the presidency, is the highest-profile elected US official to visit Taiwan in 25 years and Beijing has made clear that it regards her presence as a major provocation, setting the region on edge.

Moments before her arrival in Taiwan on Tuesday, Chinese state media announced advanced Su-35 fighter jets were crossing the Taiwan Strait.

China’s defense ministry spokesman also vowed “targeted military actions.”

Stock markets in Hong Kong and Shanghai led losses, shedding more than two percent, while Taipei was off more than one percent along with Tokyo.

In Europe, Frankfurt and Paris were down at the close of trading, while London ended the day flat after oil giant BP announced soaring profits.

Wall Street stocks also fell in a volatile session, with the S&P 500 shedding 0.7 percent.

The market selloff comes as investors try to assess the outlook for the global economy as policymakers try to bring down sky-high inflation by raising rates while trying to maintain growth.

The yield on the 10-year US Treasury note rose sharply following comments from Cleveland Federal Reserve Bank President Loretta Mester and other central bankers vowing continued aggressive interest rate hikes to counter inflation. described the parade of Fed speakers as suggesting the US central bank “is not on the cusp of a quick policy pivot.”

Despite Fed Chair Jerome Powell last week taking a hardline on rising prices, after announcing the second consecutive three-quarter-point increase in the benchmark borrowing rate, weak economic data raised investors’ hopes that policymakers would start to dial back their inflation-fighting campaign.

Mester and others “have been more hawkish than what’s baked into consensus assumptions,” said Art Hogan, chief market strategist at B Riley Wealth Management.

Australia’s central bank raised its central interest rate for a fourth time on Tuesday, increasing another 50 basis points.

The Bank of England is also under pressure to make a more aggressive 50 bps rate hike on Thursday.

- Key figures at around 2045 GMT -

New York - Dow: DOWN 1.2 percent at 32,396.17 (close)

New York - S&P 500: DOWN 0.7 percent at 4,091.19 (close)

New York - Nasdaq: DOWN 0.2 percent at 15,163.11 (close)

London - FTSE 100: DOWN 0.1 percent at 7,409.11 (close)

Frankfurt - DAX: DOWN 0.2 percent at 13,449.20 (close)

Paris - CAC 40: DOWN 0.4 percent at 6,409.80 (close)

EURO STOXX 50: DOWN 0.6 percent at 3,684.63 (close)

Tokyo - Nikkei 225: DOWN 1.4 percent at 27,594.73 (close)

Hong Kong - Hang Seng Index: DOWN 2.4 percent at 19,689.21 (close)

Shanghai - Composite: DOWN 2.3 percent at 3,186.27 (close)

Taipei - TAIEX: DOWN 1.6 percent at 14,747.23 (close)

Dollar/yen: DOWN at 133.10 yen from 131.61 yen Monday

Euro/dollar: DOWN at $1.0168 from $1.0262

Pound/dollar: DOWN at $1.2163 from $1.2250

Euro/pound: DOWN at 83.57 pence from 83.77 pence

Brent North Sea crude: UP 0.5 percent at $100.54 per barrel

West Texas Intermediate: UP 0.6 percent at $94.42 per barrel