- Stocks in Asia and Europe and futures in the US continued their decline after Friday's sell-off in the US, as President Donald Trump's trade war worries investors.
- China ratcheted up trade tensions over the weekend following the arrest last week of Huawei's chief financial officer, Meng Wanzhou. Weak Chinese trade and inflation data and a slump in Japan's economy have also hurt sentiment.
- In Europe, Germany's DAX slumped on weak export data, while UK government disarray added to uncertainty.
Hopes for a Santa rally are fading fast, with fears over US President Donald Trump's trade war with China helping to send the S&P 500 toward its worst December in 16 years.
Asian markets kicked off what looks to be a bearish day for global stocks on Monday on growing concerns over global economic growth and the US-China trade war. European stocks and US futures also fell.
Tensions over trade between the US and China heightened even further as China summoned the Canadian and US ambassadors over the weekend regarding the arrest of Huawei's chief financial officer, Meng Wanzhou, in Canada last week. China has described the arrest as "lawless" and "extremely vicious."
"Global stocks are set up for a rough ride this week after something of a drubbing last week," said Neil Wilson, the chief market analyst for Markets.com. Markets tend to rise in a "Santa rally" in December; the S&P 500 has declined in December only four times since 2002.
US equity futures were trading lower on Monday. The Nasdaq was down 0.4%, while the Dow and S&P 500 fell 0.3%. The S&P 500 has fallen more than 4.6% for the month. If it closed at that level come New Year's Eve, it would be the worst since 2002, when the index slumped 6%.
In China, the Shanghai Composite closed down 0.8% as investors fret about a continued war of words. Weak Chinese inflation figures and continued concerns about trade weighed on equities. Chinese goods-exports growth slowed to 5.4% year-on-year in November from 15.6% in October.
The Nikkei slumped 2.4% after data showed that Japan's economy contracted by more than expected in the third quarter.
European markets also slumped, with Germany's DAX index down 1.2% amid uncertainty about the German economy. Weak export data and a poor year for the country's powerhouse automotive industry aren't helping the German cause. UK Prime Minister Theresa May is under pressure and facing a massive defeat on a crucial Brexit vote that could endanger her job.
The benchmark Euro Stoxx 50 had dropped 0.6% at 9:56 a.m. in London (4:56 a.m. ET).
In France, the ongoing "Yellow Vest" protests are slowing the country's economy, with the Bank of France predicting 0.2% growth in the fourth quarter, down from an estimate of 0.4%.
Investors in the US are also still jittery about the Treasury "yield curve," a wonky market event that can signal a recession. The outlook between the two-year and 10-year government bonds stayed flat, but investors are concerned the curve will invert, which would add weight to any forecasts for a slump in growth.
"Bond markets have been more accurate than stock markets in predicting economic slowdowns," said Hussein Sayed, the chief market strategist at ForexTime. "It looks like a matter of time before the long end of the curve inverts too. While this doesn't necessarily indicate a recession is imminent, it's a bold warning signal."
Elsewhere in markets, Friday's agreement between OPEC and Russia sent oil prices initially higher, with Brent crude trading up 0.6% before dropping 1.5% at 10:40 a.m. in London (5:40 a.m. ET).