ECONOMY
On Monday , United State Indices futures fell and Asian shares slipped in early trade on growing uncertainty over whether the United States and China will be able to reach a deal to end their trade war after Washington sharply hiked tariffs. MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.2%, nearing its two-month low marked on Thursday.
The United States and China appeared at a deadlock over trade negotiations on Sunday as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any "bitter fruit" that harmed its interests. President Donald Trump tweeted late on Sunday that the United States is "right where we want to be with China," adding that Beijing "broke the deal with us" and then sought to renegotiate.
The trade war between the world's top two economies escalated on Friday, with the United States hiking tariffs on $200 billion worth of Chinese goods after President Donald Trump said Beijing "broke the deal" by reneging on earlier commitments. China has vowed to retaliate, without giving details.
White House economic adviser Larry Kudlow told a Fox News program that China needs to agree to "very strong" enforcement provisions for an eventual deal and said the sticking point was Beijing's reluctance to put into law changes that had been agreed upon. Kudlow said the U.S. tariffs would remain in place while negotiations continue.
The market reaction will ultimately depend on whether China and the U.S. continue to negotiate, whether the remaining $325 billion of U.S. imports from China also get tariffed, how China retaliates, and what happens to the 232 auto tariffs.
CURRENCY
Under that scenario, the renminbi was likely to fall between 5%-6% against the U.S. dollar in the coming three months.
The offshore Chinese yuan fell to its lowest levels in more than four months at 6.89 to the dollar. It last stood down 0.70% at 6.8935 per dollar.
The safe-haven yen still supported but not aggressively so. The dollar was holding at 109.76 yen, down 0.12% on the day and just above a 14-week trough of 109.46.
The euro was steady at $1.1229, while the dollar was a fraction softer against a basket of currencies at 97.29.
U.S. benchmark 10-year Treasury note yield inched down to 2.44%, partly as a safe haven but also on speculation a trade war would cloud global growth and thus keep major central banks accommodative.
COMMODITY
Oil prices were softer in line with the general mood of risk aversion. U.S. crude was last down 0.13% to $61.58 a barrel, while Brent crude futures up by 0.18% to $70.73.
Gold prices steadied on Monday as trade talks between the United States and China hit a wall, raising doubts over whether the two countries would be able to reach a deal, thereby boosting demand for safe-haven assets.
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