Futures on Monday pointed to a sharply lower open for U.S. stocks, but Dow futures pulled off their session lows of more than 360 points.
The moves came amid market turmoil in the Asian trading session on Monday, with Hong Kong’s Hang Seng index dropping nearly 3% and Japan’s Nikkei 225 falling more than 2.5%. The MSCI Asia ex-Japan index also sank more than 2%.
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U.S. Treasurys also saw large movements, with the yield on the closely watched 10-year note falling to as low as 1.768%.
Markets were sent on a whirlwind late last week after tensions between Washington and Beijing re-escalated, when U.S. President Donald Trump unexpectedly announced on Thursday that America will be slapping 10% tariffs on another $300 billion worth of Chinese goods starting September 1.
Trade uncertainty sent the Chinese yuan lower on Monday, with the currency breaching a key psychologically important level of 7 yuan-per-dollar. The level was last breached during the global financial crisis in 2008, according to Reuters. The onshore yuan last changed hands at 7.0289, while its offshore counterpart traded at 7.0843.
“The (People’s Bank of China) has allowed the renminbi to fall to its weakest level in a decade in response to trade tensions, ” Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note. “It appears to have decided that, given the increasingly dim prospects of a trade deal with the US, the boost to China’s export sector from currency depreciation is worth attracting the ire of the Trump.”
“The fact that they have now stopped defending 7.00 against the dollar suggests that they have all but abandoned hopes for a trade deal with the US,” Evans-Pritchard said.
Amid the trade turmoil, the S&P 500 saw its worst weekly drop of 2019 last week, falling 3.1%. The Dow Jones Industrial Average had its second-worst week of the year, declining 2.6%.
Global markets also tumbled last Friday, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng index dropping more than 2% each, while losses were also seen in Europe.
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Source: cnbc.com | Original Link