Investing.com -- U.S. futures were taking a pummelling early Monday after President Donald Trump revived concerns about a full-blown trade war with threats of tariffs on hundreds of billions of dollars of Chinese imports.
Dow futures were down 488 points or 1.8% by 6:45 AM ET (1045 GMT), while S&P 500 futures lost 49 points or 1.7% and the tech-heavy Nasdaq 100 futures contract was down 167 points or 2.1%.
Trump’s threats reportedly prompted China to scrap this week’s scheduled round of trade talks, consistent with its policy of refusing to negotiate “with a gun to its head”. The Wall Street Journal reported that a trade delegation would fly to Washington as planned.
It wasn’t clear, however, whether vice premier Liu He would head the delegation, as scheduled. Liu’s absence would make it harder for the delegation to make any top-level decisions and thus possibly push back further the timeline for a possible resolution to the dispute between the two countries.
The tweets came as a surprise after officials close to the talks had briefed about gradual progress and dangled the possibility of a summit at the end of May to sign off on a deal.
The list of most active losers in premarket trade is predictably headed by the ADRs of Chinese companies such as Alibaba (NYSE:BABA), Jd.com (NASDAQ:JD) and electric vehicle maker NIO (NYSE:NIO). However, chipmaker Advanced Micro Devices (NASDAQ:AMD) and Apple (NASDAQ:AAPL) – which has a high exposure to China both through its supply chain and its sales of iPhones – were also marked down.
Trump’s intervention came only 48 hours after another solid employment report damped hopes of any near-term interest rate cut from the Federal Reserve. Three senior Fed officials may offer their interpretation of that report when they speak later Monday.
Crude oil futures also suffered from the U.S. President’s Twitter barrage, as a trade war is seen by the International Monetary Fund and many others as one of the biggest risks to the world economy, and consequently to oil demand.
U.S. crude oil futures tumbled overnight and were down 0.9% at $61.38 a barrel at 6:45 ET, while Brent futures were down 0.6% at $70.42 a barrel.
Elsewhere in commodities, gold futures rose in line with other haven assets to stand at $1,283.05 a troy ounce, up from $1,271.95 before the tweets.
In the currency market, the U.S. dollar index, which measures the greenback against a basket of six major currencies, was flat at 97.317, rising against the euro, sterling and Australian dollar, but falling against the yen and the Swiss franc.