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Stocks - U.S. Futures Slide as Trump Ups the Ante on Trade War Tension

U.S. futures point to lower open, Dow seen off triple-digits amid trade tensions

Investing.com - U.S. futures pointed to a sharply lower open on Monday, with the Dow set for a triple-digit decline, after U.S. President Donald Trump issued a stark warning to the United States' trading partners a day earlier, calling on other countries to end to all trade barriers or face a new round of retaliatory measures.

The blue-chip Dow futures lost slid 209 points, or 0.85%, by 6:43AM ET (10:43GMT), the S&P 500 futures fell 19 points, or 0.70%, while the tech-heavy Nasdaq 100 futures traded down 77 points, or 1.07%

On the back of Trump’s threat last Friday to impose a 20% tariff on vehicles imported from Europe, the President emphasized the need for other countries to remove their trade barriers or face retaliation.


Trump insisted via Twitter on Sunday that “all countries that have placed artificial trade barriers and tariffs on goods going into their country (must) remove those barriers and tariffs or be met with more than reciprocity.”

Adding fuel to the fire, President Trump plans to bar many Chinese companies from investing in U.S. tech and to block additional technology exports to China, The Wall Street Journal reported on Sunday evening, citing people familiar with the matter.

According to the report, the Treasury Department is drawing up rules to block companies with at least 25% Chinese ownership from buying companies involved in "industrially significant technology".

Meanwhile, the National Security Council and the Commerce Department are also putting together plans for tighter export controls that will not allow "industrially significant technology" to be exported to China.

WSJ reported that the two measures are set to be announced by the end of the week and would be designed to counter Beijing’s “Made in China 2025” strategy, a program intended to make China a global leader in technology.

Outside of trade jitters, market participants face a slow session for economic data on Monday. The focus will be on new home sales for May, due at 10:00AM ET (14:00GMT), although some attention will also be paid to the Chicago Fed national activity index for May and the Dallas Fed manufacturing business index for June.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, edged forward 0.13% to trade at 94.31 by 6:46AM ET (10:46GMT), hovering below an 11-month high of 95.22 reached in the previous week.

Meanwhile, oil prices traded lower on Monday, as energy investors continued to react to last week's decision by major producers to start pumping more crude to compensate for losses in global production.

International benchmark Brent futures lost $1.26, or 1.7%, at $74.06 by 6:48AM ET (10:48GMT) a barrel, while U.S. crude futures on the New York Mercantile Exchange fell 11 cents, or 0.2%, at $68.47.

The drop came after both barrels had their best day since late 2016 on Friday, with gains of 3.4% and 4.6%, respectively, after OPEC and non-OPEC producers agreed on a modest increase in production from next month, without announcing a clear target for the output increase. Saudi Arabia, the de facto leader of OPEC, said on Saturday the move would translate into a nominal output rise of around 1 million barrels per day (bpd).

Elsewhere, European markets were under pressure as automakers and miners, seen among the sectors most at risk of a trade war, led losses. Data released on Monday also showed that German business confidence ebbed in June to its lowest in more than a year, suggesting the mood among company executives in Europe's biggest economy is darkening as trade war tensions escalate.

Earlier, Chinese markets led losses in Asia, with major markets in the region closing sharply lower, as investors wait for the next round of U.S. trade tariffs.

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