Stock Market Drops as U.S. China Relations Keep Getting Worse

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The

Dow Jones Industrial Average

was set for a lower open as relations between the U.S. and China continued to fray, while Chinese regulators continued to crack down on its U.S.-listed companies.

Dow futures were off 62 points, or 0.2%, while

S&P 500

futures had slipped 0.1%, and

Nasdaq Composite

futures were off 0.1%.

But that was nothing compared with the losses in China and Hong Kong, where the

Hang Seng

dropped more than 4%, and the

Shanghai Composite

dropped 2.3%.

Tencent

dropped as much as 8%, while Tencent Music (TME) slumped 10% after the State Administration for Market Regulation ordered the company to give up its exclusive music licensing rights, continuing a crackdown on competition. E-commerce platform operator

Meituan

dropped 11%, and Chinese internet giant

Alibaba

dropped 5% in late trade.

Prosus,

the technology investor in companies including Tencent, dived 7% in Amsterdam.

The private education sector though was in free fall, as China said educational training institutions were banned from raising money in the stock market and foreign capital cannot invest, in what’s clearly targeted at the wave of companies listing in the U.S.

New Oriental Education & Technology

dropped 47%,

China Beststudy Education

lost 41% and

Koolearn Technology

fell 33%. U.S.-listed Chinese education stocks including

TAL Education

and

Gaotu Techedu

tumbled Friday in anticipation of a crackdown.

“[The] big news overnight was the Chinese continuing to attack their capitalism and crushing some of their large moneymaking companies, many of which are listed in the US.,” writes NatAlliance Securities’ Andrew Brenner. “No fraud or drop off in business, just being regulated out of society for making a profit.”

Further adding to worries was Vice Foreign Minister Xie Feng calling upon the U.S. to change its “highly misguided mind-set and dangerous policy” in a meeting with Deputy Secretary of State
Wendy Sherman.
The yield on the 10-year U.S. Treasury note fell 0.03 percentage point to 11.255% as investors moved into safer assets.

The

Nikkei 225

however rose 1% in Tokyo after a four-day break. The Stoxx Europe 600 slipped 0.6%.

The economics calendar this week includes the latest Federal Reserve interest-rate decision on Wednesday, and U.S. gross domestic product data on Thursday.

Earnings season moves into full swing this week, with releases from electric-vehicle maker

Tesla

after Monday’s close, and tech giants

Apple,

Alphabet,

Amazon,

Microsoft

and

Facebook

all due to release figures this week.

Bitcoin has gained 13% to $38,853.89 Monday after Amazon.com placed an advertisement for a cryptocurrency and blockchain lead, leading to speculation the online retail giant will start accepting payments.