US Stocks Fall as US-China Trade Tensions Escalate Further

US stocks edged lower on Monday, as tensions between the US and China escalates further on the decision to increase scrutiny of Chinese investments in certain US companies.

The S&P 500 mini futures declined 0.5 percent to $2,744.75, while tech-heavy Nasdaq 100 futures fell 0.9 percent to $7,156.50.

Semiconductor firms and US-listed Chinese companies became the most sought-after stocks in pre-market trading on Monday.

US chipmaker Advanced Micro Devices Inc. (AMD) lost 5 percent to $14.990, while Chinese e-commerce giant Alibaba Group Holdings Ltd. shed 4.9 percent to $192.08.      

Chief market strategist Peter Cecchini said the catalyst for weakness was the reports about the White House’s plans to tighten limits on Chinese investments in the US and curbing tech exports to China, adding that European Union (EU) rhetoric continues to be tough.    

Chinese Investments in US Tech Firms to be Blocked

Government official stated on Sunday that the US Treasury Department intends to block firms with at least 25 percent Chinese ownership from acquiring American technology businesses.

The report said the administration will only take a look at new agreements and would not undo existing ones, adding that the planned investment ban will not distinguish between Chinese state-owned and private companies.     

The National Security Council and the Commerce Department were also reported to be working out on possible export controls that will prevent industrially significant technologies from being sent to China.

Those limits come on top of the tariffs that US President Donald Trump imposed on $50 billion of Chinese imports, and marks further trade conflict between the US and China, which has sent a wave of global economic concern across financial markets.       

Levies on an initial list of goods worth some $34 billion are expected to begin on July 6. China has cautioned that it will carry out retaliatory measures on US imports, but Trump has also warned about requiring tariffs on $400 billion of imports, if Beijing attempted to perform such actions.

The Dow Jones Industrial marked is worst weekly performance since late March last week, as it dropped 2 percent, following Trump’s announcement to subject all EU car imports to a 20 percent tariff.

Motorcycle maker Harley-Davidson slipped 1.3 percent to $43.58 on Monday, after it forecast that new European taxes on imported steel and aluminum will raise the cost of each of its motorcycles imported to the continent by about $2,200.  

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