Asian stocks, yuan fall as U.S.-China seen deadlocked in trade talks

SYDNEY (Reuters) – U.S. stock futures fell and Asian shares slipped on Monday on growing uncertainty over whether the United States and China will be able to reach a deal to end their escalating trade war.

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.

E-Mini futures for the S&P 500 shed 1.0%.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.4%, nearing its two-month low marked on Thursday.

Chinese shares tumbled, with the benchmark Shanghai Composite and the blue-chip CSI 300 shedding 1.4% and 1.6%, respectively, while Hong Kong’s financial markets were closed for a holiday.

Japan’s Nikkei average sunk as much as 1.0% to hit its lowest level since March 28. It last traded down 0.5%.

U.S. benchmark 10-year Treasury note yield inched down to 2.441%, partly as a safe haven but also on speculation that the escalating trade war would put more pressure on global growth and thus keep major central banks accommodative.

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.

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