Wall Street opened lower and global stock markets sank yesterday as a trade dispute between the United States and other leading economies worsened, while US Treasuries and other safer investments gained.
A US government official on Sunday said the Treasury Department was drafting curbs that would block firms with at least 25 per cent Chinese ownership from buying US companies with “industrially significant technology.”
Separately, a report by the Wall Street Journal said the US Commerce Department and National Security Council were proposing “enhanced” export controls to keep such technologies from being shipped to China.
In early trading, the Dow Jones Industrial Average fell 279.69 points, or 1.14 per cent, to 24,301.2, the S&P 500 lost 31.82 points, or 1.16 per cent, to 2,723.06 and the Nasdaq Composite dropped 136.59 points, or 1.78 per cent, to 7,556.22.
Technology stocks bore the brunt of the news, with the S&P technology index falling 1.5 per cent, the most among the major S&P 11 sectors.
The report hit Asian stocks overnight and in London the pan-European FTSEurofirst 300 index lost 1.88 per cent and MSCI's gauge of stocks across the globe shed 1.26 per cent.
Policymakers in China moved quickly to temper any potential economic drag from its dispute with the United States. Its central bank said on Sunday it would cut the amount of cash some banks must hold as reserves by 50 basis points.
The European autos sector, was hit by trade tensions between Washington and Europe, falling 2.7 percent and set for its seventh straight day of losses after US President Donald Trump said on Friday he aimed to hike tariffs on EU car imports by 20 per cent.
The index of global auto manufacturers fell 1.34 per cent.
A senior European Commission official said on Saturday that the European Union would respond to any US move to raise tariffs on cars made in the bloc.
Harley-Davidson Inc said yesterday it would move production of motorcycles shipped to the European Union from the US to its international facilities and forecast the trading bloc’s retaliatory tariffs would cost the company $90 million to $100 million a year.
The growing disputes have led investors to take refuge on safer ground. The US Treasury yield curve between 2-year and 10-year notes flattened to 33 basis points, the lowest level since 2007.
Meanwhile, Brent crude oil fell as investors prepared for an extra one million barrels per day in output to hit the markets after Opec and its partners agreed to raise production.
Brent was last at $74.36, down 1.58 per cent on the day.
In the currency market, the dollar index fell 0.12 per cent, with the euro up 0.26 per cent to $1.1685.