The stock market’s recent volatility looked set to continue Wednesday morning, as Dow Futures pointed to a loss of more than 500 points at the market open amid fears of a trade war between the U.S. and China.
As of 8:11 a.m. ET, Dow Futures were indicating an opening loss of 487 points, with the S&P 500 futures indicating a 39 point loss in early trading.
The swing comes as China announced it would levy an additional 25% tariff on imports of 106 U.S. products including soybeans, automobiles, chemicals and aircraft, in response to proposed American duties on its high-tech goods. Shares of American aircraft-maker Boeing (BA) were down 5% in premarket trading.
Those charges would apply to around $50 billion of U.S. imports, according to the Ministry of Commerce in China. The move follows the Trump administration’s decision to impose tariffs on several Chinese imports following alleged infringements of intellectual property in China.
“China’s response was tougher than what the market was expecting — investors didn’t foresee the country levying additional tariffs on sensitive and important products such as soybeans and airplanes,” Gao Qi, a Singapore-based strategist at Scotiabank told Bloomberg. “Investors believe a trade war will hurt both countries and their economies eventually.”
The expected opening plunge follows a 389 point gain yesterday, though the market is off more than 800 points in the past month. In 2017, global stock markets gained 22%.