Markets sell-off led by tech stocks as U.S.-China trade war hits sectors

A sell-off in North American stock markets intensified on Monday afternoon, led by a decline in technology stocks, after reports that U.S. officials were in the process of introducing restrictionsthat would block Chinese companies from investing in U.S. tech companies.

Reportson Sunday saidthe U.S. Treasury Department was working on restrictions that would block companies with at least 25 per cent Chinese ownership from buying U.S. tech companies.

Treasury Secretary Steven Mnuchintweetedthat the curbs would apply "to all countries that are trying to steal our technology," not just China.

But then later on Monday afternoon White House trade and manufacturing adviser Peter Navarro told CNBC that there are no plans to impose investment restrictions on any countries.

But, the tech-heavy Nasdaq composite led the losses, falling2.1per cent to close down at 7,532.01points, while the Dow Jones industrial average slumped 1.3per cent or 328pointsto24,252.80 points.

Shares of Micron Technology, which gets about half of its revenue from China,fell nearly seven per cent.

The broader S&P 500 index lost 1.4 per cent to close at2,717.07 points.

In Canada, the S&P/TSXcomposite indexwas down 1.6per cent or 266 points to close at 16,183.96, with the information technology sectorthe biggest loseron the benchmark index.

Karl Schamotta, director of market strategy at Cambridge Global Payments, said that even though the actions by the U.S. administration and retaliating countries "occupy a diminishingly small niche in the flow of global trade,"they are having importantpsychological effects.

"Businesses are becoming increasingly cautious. A number of major corporations (including Harley-Davidson) have announced plans to move production outside the United States, equity markets have come under pressure, and trade sentiment surveys have turned down on a global basis," Schamotta said in a note.

Shares of Harley-Davidson fell almost six per centafter the motorcycle maker said it would move production of motorcycles shipped to the European Unionfrom the U.S. to its international factories.

The company saidthe EU'sretaliatory tariffs against the U.S. would cost it $90 million US to $100 million US a year.

Commodities and currencies

Meanwhile, oil prices also took a tumble with West Texas Intermediate crude oil in New York down 0.52centsto $68.06US.

Top oil producers Russia and Saudi Arabia renewed their vow to boost production, putting pressure on prices.

The shutdown for maintenance of Alberta's oilsands Syncrudeplant, which turns heavy crude oil into light oil for U.S. markets, added to worries about a supply shortage in the market.

Shares of SuncorEnergy, which controls the plant, were down more than three per cent in listings in New York andToronto.

The average trading value for the Canadian dollaragainst its U.S. counterpart was 75.17cents US, up0.03 of a cent from Friday.