Wall St set for steep fall at open as yuan slide deepens trade fears

US stocks were set to open sharply lower on Monday as China’s yuan hit its lowest in more than a decade, spurring a continuation of a sell-off on trade concerns on Friday that generated the S&P 500’s worst weekly performance of 2019.

China let the yuan breach the key 7-per-dollar level on Monday, a sign Beijing might be willing to tolerate more currency weakness that could further inflame the trade conflict with the United States.

“People are fearful that (the latest round of levies) is going to make coming to an agreement on trade that much harder,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

Wall Street’s three main indexes fell sharply at the end of last week after President Donald Trump upended a temporary trade truce by threatening another round of tariffs on Chinese imports.

The support that markets have seen since May from expectations of an aggressive round of monetary easing has also evaporated in the aftermath of the US Federal Reserve’s statement last week.

At 8:29 am ET, the S&P 500 and Dow e-minis fell by around 1.4%, while futures on the Nasdaq, heavily exposed by its chipmakers and other global technology players to Chinese markets, were down about 2%.

Shares of Apple Inc slid 2.8% in premarket trading as analysts expected the newly proposed tariffs to hurt demand for its flagship iPhone, while chipmakers Advanced Micro Devices Inc, Nvidia Corp, Micron Technology and Intel dropped between 2.1% and 4.2%.

Industrial bellwethers Boeing and Caterpillar slipped 1.8% and 2.1%, respectively.

Signals from the bond market were also daunting as investors’ search for safer assets sent the U.S. 10-year Treasury yields to fresh three-year lows following their biggest weekly drop in seven years on Friday.

The CBOE Volatility index, a gauge of investor anxiety, rose to its highest level in about three months at 21.48 points.

The rest of the high-flying FAANG group also lost ground, with Facebook, Amazon.com, Netflix and Google-parent Alphabet down between 1.9% and 2.5%.

More than three quarters of S&P 500 companies have reported results so far, with about 74% topping analysts’ expectations for profit, according to Refinitiv IBES data.

No.1 US meat processor Tyson Foods rose 1.3% after beating quarterly profit estimates.