The Monday Market Minute

  • Global stocks slip into the red as trade war concerns hit China shares, German exports.
  • China shares extend slide, yuan briefly rebounds as government steps in to steady currency's decline.
  • European stocks edge lower as surprise slump in industrial orders from Germany highlights trade war impact.
  • Benchmark 10-year Treasury yields bump higher as investors prep for $239 billion in new supply this week.
  • Wall Street futures turn red as global stocks retreat, with Dow called 40 points lower at the opening bell.

Market Snapshot

Global stocks slipped lower Monday, as markets once again focused on the escalating trade war rhetoric between the U.S. and China and noted a slowdown in industrial orders from Germany that suggest the tit-for-tat application of levies by the world's biggest economies is starting to impact growth and investment. 

China's decision Friday to impose tariffs on $60 billion worth of U.S. made goods, a move that was followed by a series of weekend Tweets from President Donald Trump that suggested his administration would not back down from its plans to take its total tariff target to $500 billion, unsettled markets in Asia Monday, pushing stocks in China into extended year-to-date declines and helping the dollar index hold at a multi-week high of 95.30 against a basket of six global currencies.

China's People's Daily newspaper responded by calling the President a "street fighter" who used "extortion and intimidation" to get what he wants, adding that "governing a country is not like doing business."

China's Shanghai Composite ended the session 1.26% lower -- and down 18.2% for the year -- while the bluechip CSI 300 was marked 1.25% to the downside at 3,723.69 points by the close of trading. That said, stocks around the region were otherwise resilient, with the MSCI Asia ex-Japan index rising 0.1% and Japan's Nikkei closing 0.08% lower at 22,507.32 points.

The yuan, which was modestly stronger against the U.S. dollar in the early session following a move by Chinese authorities to stem speculators by adding additional capital requirements on trade, reversed course and fell for the 13th consecutive session to a near 14-month low of 6.8438.

European stocks were also weaker in the early hours of trading, although the euro's extended decline against the dollar to 1.1531, the lowest since late June, helped boost stocks modestly higher by mid-day, with the Stoxx 600 rising 0.15% and Germany's DAX index shrugging off a much weaker-than-expected reading of industrial orders, which fell the most in 18 months in June, to rising 0.28% 

Britain's FTSE 100 was 0.21% higher by mid-day in London, but that was almost entirely down to the fact that the pound is trading at an 11-month low of 1.2936 against the dollar following a series of comments over the weekend by government officials, including Trade Secretary Liam Fox, that a so-called "no deal" Brexit, in which the U.K. leaves the EU and trades only on WTO rules, is now more likely.

Early indications from U.S. equity futures suggest a modestly stronger open on Wall Street Monday, with contracts tied to the Dow Jones Industrial Average (^DJI) indicating an 18-point bump hihger while those linked to the S&P 500 (^GSPC) were marked 2.3 points to the upside. Nasdaq Composite (^IXIC) futures were seen 11.3 points higher.

Benchmark 10-year U.S. Treasury yields were marginally higher at 2.95%, with investors bracing for a near-record weekly sale of $239 billion in new debt as the government continues to fund its late 2017 tax cuts, a decision that the Congressional Budget Office says will take the country's budget deficit past $1 trillion by the year 2020.

Global oil prices were firmer in early European trading after U.S. Secretary of State Mike Pompeo confirmed that the White House would impose sanctions on Iran this week that include limiting its purchase of dollars and certain precious metals. The U.S. has also told countries not to buy Iranian crude, although those sanctions aren't due to kick-in until early November.

Brent crude contracts for September delivery, the global benchmark, were seen 76 cents higher from their Friday close in New York and changing hands at $73.76 in London trading, while WTI contracts for the same month were marked 98 cents higher at $67.47 per barrel.