US open: US and China tensions send Dow 240 points lower

Wall Street trading began with losses on Monday as escalating tensions between the US and China led to a 240-point decline in the Dow.

At 1530 BST, the Dow Jones Industrial Average was down 0.89% to 24,866.06, while the S&P 500 had lost 0.55% to 2,764.26 and the Nasdaq was 0.43% lower at 7,713.23.

Connor Campbell, a financial analyst at SpreadEx, said, "Things got pretty ugly after the US open, the Dow Jones following in the footsteps of its Eurozone peers by posting some heavy losses."

"The Dow plunged 240 points as the session got underway, a sharp decline that took it back below 24850 and to its worst price in 12 days. The index is struggling under the weight of the escalating US-China trade war, with Trump's decision to push forward with tariffs on Beijing last Friday causing another nasty flare-up of international posturing," Campbell added.

On Friday, Trump announced 25% tariffs on up to $50bn worth of Chinese imports. China then retaliated by announcing 25% tariffs on $34bn-worth of imports from the US.

Oanda analyst Craig Erlam said: "We're seeing a slightly risk-averse tone in financial markets at the start of the week after the trade spat between the US and China ramped up over the weekend."

"Both countries have laid out plans to impose tariffs on one another on 6 July which is making investors a little uncomfortable, more so due to the potential for the situation to escalate further than the tariffs themselves. The question now is how much pain both sides will be willing to inflict on the other - and themselves in the process - before coming to an agreement that removes tariffs and eases investor concerns," added Erlam.

Elsewhere, oil prices were mixed ahead of the OPEC meeting at the end of the week, with the cartel set to discuss reducing or even ending the coordinated output cut that was imposed to try to bring inventories back in line with the five-year average.

"An increase in production from the OPEC nations and others including Russia involved in the deal will be welcomed by Trump who has recently been berating them for pushing prices higher, despite the fact that part of this has been driven by US sanctions on Iran," Erlam said.

West Texas Intermediate was up 1.07% to $65.07 a barrel, while Brent crude gained 1.55% at $75.13.

In corporate news, electric car maker Tesla was up 1.22% after chief executive Elon Musk showed off the company's newest production line over the weekend on Twitter.

Elsewhere, WP Carey lost 2.34% after announcing a proposed merger with Corporate Property Associates in a stock-for-stock deal valued at around $6bn.

On the data front, the National Association of Home Builders housing market index for June showed that sentiment among US housebuilders deteriorated in June due to sharply higher lumber prices, according to data released on Monday.

The NAHB/Wells Fargo housing market index slipped two points from May to 68, missing expectations for a reading of 70.0.

The index of current sales conditions fell one point to 75, while the component gauging expectations in the next six months and the metric charting buyer traffic also dropped one point to 76 and 50, respectively.

Regionally, on a three-month moving average, the index for builder sentiment in the Northeast was up two points to 57, while the gauges for the West and Midwest were unchanged at 76 and 65, respectively, and the index for the South slipped one point to 71.

Speeches from Atlanta Fed President Raphael Bostic and New York Fed President John Williams were still to come at 1800 BST and 2045 BST, respectively.