Lower open expected for the U.S markets Monday after the key equity gauges looked very low on Monday morning.

The Dow Jones futures showed a negative open of 380 points in the morning and futures on the S&P 500 and Nasdaq were also down.

President Trump’s threat to slap 10 percent tariffs on $300 billion Chinese imports to the U.S got the Chinese response on Monday. China sent its once tightly controlled currency yuan plunging to a decade low on Monday breaking the psychological barrier of 7 yuan-per-dollar.

Some reports also said China directed its state-owned companies to stop the U.S. agricultural imports.

According to the Julian Evans-Pritchard, senior China economist at Capital Economics, the rationale of letting yuan fall is that China does not see a deal happening with the U.S. So it thinks the best boost for its exports is to attract the ire of Trump.

“The fact that China stopped defending 7.00 against the dollar suggests that they have abandoned hopes for a trade deal with the US,” added Evans-Pritchard.

Oil price falls

Meanwhile, oil prices fell on Monday after concerns escalated on global economic growth and oil demand following U.S. President Donald Trump’s threat to step up the trade war with China by slapping bigger tariffs.

If the threat translates into action, fuel demand in the world’s two biggest crude consumers will suffer.

On Monday, Brent crude futures fell 1.15 percent $61.18 per barrel by 0840 GMT. The U.S. West Texas Intermediate (WTI) crude futures were also down 1.28 percent to $54.95 a barrel.

PVM Oil Associates analyst Stephen Brennock said the scene is set for a ramped trade war between both sides. “The prospect of an escalating U.S.-China trade war will do no favors for the shaky global economic outlook.”

On Monday, China let the yuan tumble beyond the key 7-per-dollar level for the first time in more than a decade sending a message that Beijing may tolerate further currency weakness to handle the trade dispute.

Oil prices also faced pressure from the rising oil exports in the U.S. According to the data by U.S. Census Bureau the U.S oil shipments surged more than a quarter-million barrels per day (BPD) in June hitting a record 3.16 million BPD.

Asian stocks in red

On Monday, Asian markets fell into the red. The stocks in Asia fell to a 6-month low with Chinese currency yuan plunging to a record low after the Sino-U.S. trade war escalated.

China’s Shanghai Composite was down 1.62 percent while Hong Kong’s Hang Seng index plunged 2.85 percent Monday. The city had a general strike on Monday.

Japan’s Nikkei shed 2.4 percent and that was the sharpest daily drop since March. The Topix fell 1.8 percent while South Korea’s Kospi fell 2.56 percent. Australia’s ASX 200 was down 1.9 percent.

GettyImages-Stock market Ap 23
Traders work after the opening bell at the New York Stock Exchange (NYSE) on April 18, 2019, in New York City. JOHANNES EISELE/AFP/Getty Images

Indian share market closed at a five-month low, on cues from a global sell-off after the Sino-US trade war raged. The market was also pressured by the Indian government’s decision to scrap the special status of the Kashmir state.

The broader NSE Nifty fell 1.23 percent while the benchmark BSE Sensex closed 1.13 percent lower.

European shares fell to a two-month low on Monday with the pan-European STOXX 600 index losing 2 percent. Stoxx lost 2.5 percent on Friday.

Gold price at a high

Meanwhile, gold prices jumped Monday more than 1 percent to their highest in more than six years.

Spot gold jumped 1.1 percent at $1,456.51 per ounce as of 0725 GMT. The U.S. gold futures rose 0.8 percent to $1,468.50 an ounce.

“Gold is certainly benefiting from the global concerns about the outlook for growth, and central banks are likely to maintain their accommodative stance, so safe-havens like gold are in demand,” said Michael McCarthy, chief market strategist, CMC Markets.