Dow futures point to a triple-digit decline at Monday’s open

U.S. stock futures pointed to sharp losses on Monday as investors keep fretting over the state of U.S.-China trade relations.

As of 6:49 a.m. ET, Dow Jones Industrial Average futures indicated a drop of about 280 points at the open. S&P 500 futures pointed to a loss of 1.1% while Nasdaq 100 futures indicated a drop of 1.5%.

Trade bellwethers Caterpillar and Boeing fell more than 1.5% each while Apple dropped more than 2%.

“In the immediate term, we would be watching to see if China retaliates against last Friday’s tariff increase. The performance of the equity markets would also be critical. Thus far, the selloffs in China and the US indices have been minor. A more serious decline could prompt more urgency by both sides to reach a deal,” strategists at Singapore’s DBS Group Research wrote in a note.


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Asian markets fell broadly. The Nikkei 225 index declined 0.7% overnight while the Shanghai Composite pulled back 1.2%.  European stocks also dropped. The Stoxx 600 index fell 0.5% while the German Dax dipped 0.7%.

On Saturday, U.S. President Donald Trump said China should act now to make an agreement — or it would risk facing a worse deal if negotiations continue into a possible second term after the 2020 presidential election.

The president claimed China was “beaten so badly” in recent trade negotiations that Beijing wanted to wait until after the 2020 election in the hope a Democrat would win the White House and offer them a better deal.

Trump also tweeted on Monday that China has “taken so advantage of the U.S. for so many years, that they are way ahead (Our Presidents did not do the job). Therefore, China should not retaliate-will only get worse!”

Yet despite that tension between the world’s two largest economies, White House economic advisor Larry Kudlow said Sunday that Trump and Chinese President Xi Jinping are likely to meet at the June G-20 summit in Japan.

Kudlow said the chances of such as meeting “were pretty good,” but he said there are “no concrete, definite plans” for when U.S. and Chinese negotiators will meet again.

Last Friday, major markets across the globe advanced despite Trump making good on his threats to raise tariffs from 10% to 25% on $200 billion worth of Chinese goods shortly after the stroke of midnight ET.

That positive sentiment was boosted by the U.S. president saying in a Friday afternoon Twitter post that the latest round of trade talks with China’s delegation — which concluded after tariffs had already been increased — had been “candid and constructive.”

Elsewhere, the calendar is thin with no economic data releases nor big corporate results due. Boston Fed President Eric Rosengren and Fed Vice Chairman Richard Clarida are due to speak at 9:10 a.m. ET.

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