Stock markets: Hong Kong’s Hang Seng (HSI) fell 2.4%, and mainland China’s Shanghai Composite (SHCOMP) closed down 2.3%. Germany’s DAX (DAX) and France’s CAC 40 (CAC40) fell 0.3% and 0.4%, respectively, while London’s FTSE 100 (UKX) was flat. All three major US stock indexes opened in the red. The Taiwan dollar was down 0.1% against the US dollar. Meanwhile, the Japanese yen, a traditional safe-haven currency, rose 0.6% against the dollar. Concerns about escalating tensions in the Taiwan Strait are roiling markets. Pelosi is expected to visit Taiwan as part of her Asia tour, according to a senior Taiwanese government official and a US official, despite warnings from Biden administration officials who are concerned about China’s response to such a high-profile visit. The stop – the first for a US House speaker in 25 years – is not on Pelosi’s public itinerary and comes at a time when US-China relations are already at a low point. During a routine foreign ministry briefing on Monday, China warned of the “extreme political impact” of Pelosi’s planned visit to the self-governing island that China claims as part of its territory. Foreign Ministry spokesman Zhao Lijian said the country’s military “will not stand idly by” if Beijing feels its “sovereignty and territorial integrity” are under threat. “Pelosi’s visit to Taiwan breaks the mood today. And amid escalating tensions across the Taiwan Strait and deepening concerns about a global economic slowdown, investors have been sinking steadily into US Treasuries,” said Stephen Innes, chief executive of SPI Asset Management. , on Tuesday. “Neither party wants a real war, but the risk of an accident or even an escalation of an aggressive war game is there, which could always lead to a tactical error,” he said. ING analysts, meanwhile, expected China could send warplanes near or even over Taiwan “before, during and after” Pelosi’s possible visit. “It appears that the US has underestimated or misinterpreted President Xi’s stance on Taiwan. Xi’s determination to unite Taiwan with mainland China is extremely firm,” the analysts said in a research note on Tuesday. “We will see weakness in the Chinese yuan and Taiwan dollar in the coming days,” they added. CNN’s Eric Cheung, Kylie Atwood, Alex Rogers and Kevin Liptak contributed to this report.