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US stocks futures tumble on Trump trade threat on China

About 25 minutes into trading, the Dow Jones Industrial Average stood at 26,182.21, down 1.2%.

US President Donald Trump at the White House in Washington, DC on 11 February 2019. Picture: AFP

NEW YORK, United States - Wall Street stocks sank early Monday, joining most global bourses in tumbling as US President Donald Trump threatened new tariff measures on China.

About 25 minutes into trading, the Dow Jones Industrial Average stood at 26,182.21, down 1.2%.

The broad-based S&P 500 also shed 1.2%, sinking to 2,911.44 while the tech-rich Nasdaq Composite Index dropped 1.4% to 8,050.89.

Trump on Sunday vowed to raise tariffs to 25% from 10% on $200 billion in Chinese merchandise, expressing frustration at the pace of US-China negotiations and throwing into doubt the chances of success in a long-discussed trade deal.

"The Trade Deal with China continues but too slowly, as they attempt to renegotiate. No!" Trump tweeted Sunday.

Trump also renewed a threat to impose tariffs on all Chinese imports to the US -- worth $539.5 billion last year.

Despite Trump's tweetstorm, Chinese foreign ministry spokesman Geng Shuang said a Chinese team was "currently preparing to go to the US for negotiations" -- but he did not say when or whether top negotiator Liu He would lead the delegation.

The Twitter tirade pushed most global bourses downward. In the US, companies with large China operations or marketing strategies were solidly lower, including Apple, Caterpillar, Deere & Company and Nike.

The most recent Trump threats come as US indices linger near record highs, in part due to the ebbing of threats between Beijing and Washington as the two sides have engaged in several rounds of talks that they have described as constructive.

"This latest twist in the US-China trade talk drama may be a significant setback or just some of the tough talk tactics that we saw towards the end of the NAFTA 2.0 negotiations," said a note from Art Hogan, chief market strategist at National Securities Corporation.

"Either way, with markets at or near all-time highs, it looks like a messy Monday of shooting first and asking questions later."

A note from Goldman Sachs put the odds of Trump going ahead with the tariff hike on Friday at 40%.

Goldman said the most important sign will be whether the Chinese delegation comes to Washington this week. If that happens, a deal between Washington and Beijing "is reasonably likely," the note said.

But if the talks are cancelled, a hike in tariffs becomes the "base case" scenario, Goldman said.

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