Investing.com - Here are the top five things you need to know in financial markets on Monday, June 25:
1. Trade War Rhetoric Heats Up
Escalating trade rhetoric will keep investors on their toes this week after President Donald Trump issued a stark warning to the United States' trading partners on Sunday, calling on other countries to end to all trade barriers or face a new round of retaliatory measures.
As fears mount over a trade war between the world's largest economy and major trading partners like China and the European Union, Trump renewed his call for "fair trade" that reduced barriers to entry.
The tweet added to the sense of caution felt after Trump on Friday threatened to impose a 20% tariff on all cars imported from the European Union. The EU responded by saying it will have no choice but to retaliate to such a move.
Investors and traders are worried that threats of higher U.S. tariffs and retaliatory measures by others could derail a rare period of synchronized global growth.
2. Trump Targets Chinese Investment
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.
The two measures are set to be announced by the end of the week, and are intended to counter Beijing's Made in China 2025 — a Chinese initiative to be a global leader in technology.
The Treasury Department is drawing up rules to block companies with at least 25% Chinese ownership from buying companies involved in "industrially significant technology," the WSJ said.
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, the paper added.
It was the latest development in escalating trade tensions between the world's two largest economies.
Last week, Trump requested the United States Trade Representative identify $200 billion worth of Chinese goods for potential additional tariffs at a rate of 10%. That threat followed levies announced by both nations earlier this month.
Washington and Beijing appeared increasingly headed toward open trade conflict after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policies, lack of market access in China and a $375 billion U.S. trade deficit.
3. Dow Futures Drop More Than 150 Points
The trading week was set to kick off on a downbeat note on Wall Street, with U.S. stock futures pointing to sharp losses at the open, as worries over a brewing trade war between the U.S. and its major trading partners kept buyers on the sidelines.
At 5:40AM ET, the blue-chip Dow futures were down 170 points, or around 0.7%, on track for the ninth losing session in the past ten.
The S&P 500 futures slumped 17 points, or 0.6%, while the tech-heavy Nasdaq 100 futures indicated a loss of 60 points, or roughly 0.8%.
There are no major earnings scheduled for today.
Elsewhere, European markets were under pressure as automakers and miners, seen among the sectors most at risk of a trade war, led losses. Among national indexes, Germany's exporter- and autos-heavy DAX index fell 1.3%.
Earlier, Chinese markets led losses in Asia, with major markets in the region closing sharply lower.
4. Dollar Steadies Below 11-Month Peak
Away from equities, the U.S. dollar index was little changed to trade at 94.25, climbing from an earlier low of 94.12. Still, the index, which measures the greenback against a basket of six major currencies, was below an 11-month high of 95.22 reached in the previous week.
In the bond market, the U.S. 10-year Treasury yield dipped to around 2.875%.
On the data front, the calendar is thin, with no top-tier reports on deck. The Chicago Fed national activity index for May will be released at 8:30AM ET, followed by new home sales for May at 10AM ET.
5. Oil Markets Stay Volatile After OPEC's Output Deal
Crude oil markets remained volatile 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 were recently down 69 cents, or 0.9%, at $74.63 a barrel after Friday's 3.4% jump. But U.S. crude futures on the New York Mercantile Exchange were up 26 cents, or 0.4%, at $68.84 after its own 4.6% pop Friday.
Both had their best day since late 2016 on Friday, 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 said on Saturday the move would translate into a nominal output rise of around 1 million barrels per day (bpd).