TLDR
- Stock futures dropped Monday morning with Dow futures down 153 points (0.4%) and S&P 500 futures falling 0.4%
- China accused the US of undermining their Geneva trade truce after Trump claimed China violated the agreement
- Trump threatened to double steel tariffs to 50% from 25%, adding to market uncertainty
- Gold prices jumped 2% to $3,383 per ounce as investors sought safe haven assets
- Treasury yields rose with 10-year bonds climbing 3 basis points to 4.44%
Stock futures fell Monday morning as trade tensions between the US and China heated up again. Both countries accused each other of breaking their 90-day trade truce agreed to in Geneva last month.
Dow Jones Industrial Average futures dropped 153 points or 0.4% in premarket trading. S&P 500 futures also fell 0.4% while Nasdaq 100 contracts declined 0.5%.
The selloff started after China’s Ministry of Commerce said the White House had “severely undermined” the Geneva trade deal consensus. This came after President Trump posted on social media Friday that China “has totally violated its agreement” with Washington.
Trump also threatened Friday to double tariffs on steel imports to 50% from the current 25%. This added another layer of uncertainty for markets already worried about shifting trade policies.
Market Reaction Spreads Beyond Stocks
The trade tensions sent ripples across financial markets beyond just stock futures. Treasury yields climbed with benchmark 10-year bonds rising 3 basis points to 4.44%.
Two-year Treasury note yields ticked up 1 basis point to 3.92%. The moves showed investors becoming more cautious about economic growth prospects.
Gold prices jumped 2% to $3,383 per Troy ounce as investors sought safe haven assets. The US Dollar Index fell 0.5% against six other major currencies.
Previous Market Gains at Risk
The current tensions threaten to derail recent strong market performance. The S&P 500 rallied more than 6% in May, marking its best month since November 2023.
The Nasdaq Composite soared 9% last month while the Dow gained 4%. Tech stocks led the charge as investors remained optimistic about AI developments and economic data.
Deutsche Bank strategist Jim Reid noted the difficulty in predicting trade policy moves. He said tariff uncertainty will likely persist for months ahead even if peak policy aggressiveness has passed.
Key Economic Data Coming This Week
Markets face a busy week of economic releases that could provide more direction. The May nonfarm payrolls report due Friday will offer insights into how trade tensions affect the broader economy.
May updates on US factory activity from S&P Global and ISM are scheduled for Monday. These reports will show how manufacturing sectors are handling current trade uncertainties.
Earnings season is nearly complete with reports from CrowdStrike, Broadcom, DocuSign, and Lululemon still expected. Ukraine’s drone strikes on Russia Sunday added geopolitical concerns to existing trade worries.
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