U.S. stock futures fell sharply on Monday as a trade war between the world’s largest economies intensified with China retaliating against the U.S.′ latest move.
Dow Jones Industrial Average futures dropped 385 points, indicating a fall of 380 points at the open. S&P 500 and Nasdaq 100 futures also indicated sharp losses.
Trade bellwethers Caterpillar and Boeing dropped 2.2% and 1.9%, respectively, in the premarket. Semiconductor stocks liked Micron Technology, Skyworks Solutions and Advanced Micro Devices also fell before the bell.
China, which has historically controlled its currency, the yuan, allowed it to fall to its lowest level against the dollar in more than a decade. The onshore yuan broke above 7 per U.S. dollar and traded at 7.04.
“It appears to have decided that, given the increasingly dim prospects of a trade deal with the US, the boost to China’s export sector from currency depreciation is worth attracting the ire of the Trump,” Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note. “The fact that they have now stopped defending 7.00 against the dollar suggests that they have all but abandoned hopes for a trade deal with the US.”
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