Stocks slump, dollar gains as trade talks deadlock

Bloomberg

US equity futures slumped and stocks declined across Europe and Asia as investors prepared for the next phase of the escalating trade war between America and China. The yuan tumbled, while Treasuries rallied.
Contracts on the S&P 500, Dow Jones Industrial Average and Nasdaq 100 indexes all slid, pointing to a big drop at the
US open, as President Donald Trump warned China not to retaliate on tariffs. The Stoxx Europe 600 index was dragged into the red as almost every industry sector retreated. With no date scheduled to resume bilateral Sino-US talks, shares dropped in all principal Asian markets except Hong Kong, which was closed for a holiday. Trade-sensitive commodities including soybeans and cotton fell. The dollar strengthened as 10-year Treasury yields fell to the lowest level, while the yen also rose. Oil climbed as Saudi Arabia said two of its tankers were “sabotaged.”
Investors are struggling to find positive catalysts for risk assets after the US stepped up punitive tariffs on $200 billion in annual imports from China, and Trump started threatening that the trade standoff will “get worse” if there’s retaliation. While both economic superpowers have also worked hard since talks ended to project calm and emphasize that they plan to continue negotiations, markets seem to sense fundamental divisions between the two sides.
On Monday, American officials are expected to announce details of their plans to boost tariffs on all remaining imports from China — some $300 billion in trade. Chinese state media blamed the US for a lack of progress in trade talks while emphasizing the Asian nation’s economic resilience.
Elsewhere, Bitcoin climbed above $7,000 as the recent gains in cryptocurrencies extended over the weekend. Most base metals retreated as traders reassessed the demand outlook given the threats to global economic growth. Other raw materials were also caught in the crossfire of the trade impasse, with China’s cotton futures plunging by daily limit.
Earnings this week include Vodafone, Alibaba, Tencent, Cisco, Nvidia. A slew of Federal Reserve policy makers speak: Boston Fed President Eric Rosengren and Fed Vice Chairman Richard Clarida speak at a “Fed Listens” event hosted by the Boston Fed.
New York Fed President John Williams speaks at an event in Zurich. Kansas City Fed President Esther George and Richmond Fed President Thomas Barkin also make appearances.
Japan balance of payments is due on Tuesday. China industrial production and retail sales are slated for Wednesday, same day as US retail sales and industrial production. Bank of Indonesia has an interest rate decision on Thursday. Australian unemployment is out on Thursday.
Futures on the S&P 500 Index tumbled 1.3% in New York time. The Stoxx Europe 600 Index declined 0.5%. The MSCI Asia Pacific Index fell 0.8%. The MSCI Emerging Market Index dropped 0.8%.
The Bloomberg Dollar Spot Index increased 0.2%. The offshore yuan sank 0.9% to 6.9037 per dollar, heading for the biggest dip in almost 10 months. The British pound gained 0.2% to $1.3021, the largest rise in more than a week. The Japanese yen rose 0.3% to 109.65 per dollar. The euro rose less than 0.05% to $1.1236.
The yield on 10-year Treasuries dipped four basis points to 2.42% on the biggest fall in a week. Germany’s 10-year yield slipped one basis point.