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.
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. Bloomberg News also reported China has asked state-owned companies to suspend U.S. agricultural imports.
These moves come after President Donald Trump announced last week the U.S. would impose a 10% tariff on $300 billion worth of Chinese imports. The tariff will take effect on Sept. 1. Trump’s announcement came after Chinese and U.S. officials discussed trade earlier last week as the two countries tried to restart talks.
Investors rushed to traditional safe havens like Treasurys and gold on Monday amid the uncertainty. The benchmark 10-year Treasury yield fell to 1.77% and reached its lowest level since November 2016. Gold futures for December delivery gained 1.1% to trade at $1,473 per ounce.
MacDailyNews Take: As the back and forth continues, it’s good to remember that it’s always darkest before the dawn.