Hong Kong (CNN Business) Global stock markets slumped Monday, as investors reacted to the prospect of a drawn-out trade war.

China on Sunday said it will "not back down" in a trade fight with the United States, two days after signaling it could blacklist foreign companies from its huge market.

"The series of actions over the weekend means that China's 'long march' has begun," Iris Pang, an economist with ING said in a research note Monday.

"It means that the trade war has not only become a technology war but also a broad-based business war. There will be more retaliation actions from China, especially for the technology sector," she added.

Tokyo's Nikkei recovered slightly from a rough opening to close down 0.9% on Monday. The Shanghai Composite declined 0.3%, while Hong Kong's Hang Seng shed 0.1%.