- "Traders are increasingly pricing in a prolonged trade war hitting the global economy," said Jasper Lawler at London Capital Group.
- The futures underlying the Dow and the S&P 500 are down around 0.6%, while Nasdaq are down 0.8%.
Asian and European stocks and US futures slid sharply on Monday after China's defense minister vowed not to back down in its trade war with the US.
"Traders are increasingly pricing in a prolonged trade war hitting the global economy," said Jasper Lawler, head of research at London Capital Group.
Adding to the worries: Chinese state media announced a government investigation into FedEx, and South Korean exports, seen as a canary in the coalmine for global growth, slowed sharply in May.
Comments out of China that seemed to escalate the dispute after President Donald Trump announced tariffs on all Mexican imports and the end of special trade treatment for India, a status that exempted billions of dollars of the country's products from US tariffs, according to CNN.
"If the US wants to talk, we will keep the door open," General Wei Fenghe said at the Shangri-La Dialogue in Singapore on Sunday, according to CNN. "If they want to fight, we will fight until the end."
"Bully us? No way," he added.
"Concerns grow that new threats against Mexico and India, heaped on top of the US-China trade dispute could push the global economy into recession," Lawler said.
China also intends to investigate whether FedEx violated the legal rights of its clients and hurt their interests, after parcels intended for Chinese telecoms titan Huawei were diverted, according to Xinhua, China's official news agency. The move could be seen as a retaliation after the US government blacklisted Huawei over espionage concerns, before temporarily relaxing the ban.
Meanwhile, South Korean exports plunged 9.4% in the first 20 days of May, significantly exceeding the median forecast of a 5.6% decline, according to Reuters.
The decline was likely driven by the escalating US-China trade war. President Donald Trump accused China of sabotaging a draft trade agreement, hiked tariffs on $200 billion worth of Chinese goods, and started preparing to expand tariffs to virtually all US imports from China. China retaliated by raising tariffs on $60 billion worth of US products in June, and threatening the US supply of rare-earth metals.
Here's the market roundup as of 9.10 a.m. (4.10 a.m. ET):
- European equities dropped in morning trading. Germany's DAX fell 0.6%, the Euro Stoxx 50 slid 0.8%, and Britain's FTSE 100 tumbled 1.1%.
- Asian indexes were broadly lower with the Shanghai Composite down 0.3%, the SZSE Component down 0.7%, and Hong Kong's Hang Seng down 0.3%.
- US stocks are poised to fall. The futures underlying the Dow Jones Industrial Average and S&P 500 are down around 0.6%, while Nasdaq are down 0.8%.
- Oil prices slumped with Brent crude down 1.6% at $61 and WTI crude down 1% at $53.
SEE ALSO: Stocks plunge as China trade war and Mexico tariffs fuel a 'triple hit of bad news'
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