How major USA stock indexes fared Monday

Defense Secretary James Mattis welcomes Chinese Minister of National Defense Gen. Wei Fenghe to the Pentagon

Among the biggest losers on Monday was telecom giant Vodafone Group, which dropped 2.4% after reports the company was set to cut dividends. Shares fell in Taiwan and Southeast Asia.

The index also displayed resilience to heavy losses overnight on Wall Street after Beijing retaliated against Washington's latest salvo in the trade row.

Investors around the world fear a protracted trade war in which both the United States and China continue to raise tariffs. Investors are concerned about reduced consumption due to higher prices, retaliatory tariffs on US exports, and disrupted supply chains.

The Dow Jones Industrial Average rose 207.06, or 0.8%, to 25,532.05, and the Nasdaq composite index jumped 87.47, or 1.1%, to 7,734.49. The sell-off extended the market's slide into a second week.

Stocks doing business in China got hit the hardest. Chipmakers were among the biggest decliners.

The world's two largest economies had seemed to be on track to resolve the ongoing trade dispute that has raised prices for consumers and pinched corporate profit margins.

That has given way to concern that a full-blown trade war could crimp what is otherwise a mostly healthy economy.

Tariff increases already in place have disrupted trade in American soybeans and Chinese medical equipment. The U.S. has the stronger legal stance as far as global trade agreements are concerned.

The Dow dove 617.38 points, or 2.4%, to 25,324.99.

If tariff levels remain where they are today, the average American family is expected to pay about $770 in higher costs each year the tariffs remain in place, says Laura Baughman, a co-author of the study and president at Trade Partnerships Worldwide. It closed at $37.10. The Standard & Poors 500 and Nasdaq Composite indexes sustained similar losses, dropping by, respectively, 2.4% and 3.4%.

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Bank of America Merrill analysts said the new tariffs posed a downside risk of between 1 per cent and 3 per cent for S&P 500 company earnings in 2019.

China said it would impose higher tariffs on $US60 billion in U.S. goods despite President Donald Trump's warnings not to retaliate against additional tariffs on Chinese imports announced by the White House on Friday. Officials also said they were preparing to expand tariffs to cover another $300 billion of goods.

Donald Trump returned to Twitter over the weekend calling on the U.S. to produce products domestically, leading many people to anticipate further hostility.

Ministry of Foreign Affairs spokesman Geng Shuang said Monday that China will "never yield to external pressure", hours before Beijing announced its latest round of tariffs.

Higher gold prices, which helped to soften the blow during Monday's losses, kept the TSX from gaining more on Tuesday when prices dropped.

USA markets were up, but recovered about one third of Monday's losses.

Prices for USA government bonds, which are considered ultra-safe investments, rose sharply, sending yields lower.

The benchmark 10-year Treasury yield fell to 2.4% on Monday while the 2-year rate dipped to 2.18%. It lost 62 cents or 1% to settle at $61.04 per barrel on Monday.

The safe-haven yen lost ground as the mood improved, with the dollar strengthening 0.4% against the Japanese currency to 109.67. The French CAC 40 jumped 1.5%, the German Dax rose 1% and the FTSE 100 in London climbed 1.1%.

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