NEW YORK (Reuters) - U.S. stock futures dove on Monday after Washington and Beijing placed new taxes on each other’s goods, while Argentina imposed capital controls and cast a new spotlight on emerging-market risks.

Traders work on the floor of the Buenos Aires Stock Exchange, in Buenos Aires, Argentina September 2, 2019. REUTERS/Agustin Marcarian

The United States imposed 15% tariffs on a variety of Chinese goods and China began to impose new duties on a $75 billion target list. U.S. President Donald Trump said both sides would still meet for talks later this month.

Wall Street was shut for the Labor Day holiday on Monday, but futures contracts tied to the major indexes were trading and spiked lower.

The E-mini futures for U.S. S&P 500 ESc1 fell as much as 1.2% in early trade and last stood down 0.9%. MSCI's All-Country World Index .MIWD00000PUS, which tracks shares across 47 countries, was down 0.1% on the day.

“The ultimate outlook for the trade dispute has become harder to predict with confidence,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “Since trade tensions have become the major driving force for stocks, even greater than monetary policy, we advise against adding significantly to equity exposure - particularly for those who have an adequate strategic allocation.”

Argentina’s international dollar bonds dropped to record lows and its financial stocks tumbled after President Mauricio Macri re-imposed capital controls on Sunday as the country battled to avoid its ninth sovereign default.

The about-face by Macri, who had previously lifted many protectionist practices of his predecessor, Cristina Fernandez de Kirchner, came after the government failed to stem heavy investment outflows and to shore up its tumbling currency.

TRADE WAR

European and mainland Chinese shares ticked higher, aided by a private sector survey that showed factor activity unexpectedly expanded in August in China, though gains in the Caixin/Markit Manufacturing Purchasing Managers’ Index contrasted with official data that pointed to further contraction.

Pledges by the European Central Bank and Chinese government to counteract manufacturing weakness are giving some support to stocks.

Income-generating, so-called “carry,” positions, such as select emerging market currencies, will perform well as central banks ease policy in response to weaker growth, said UBS’ Haefele.

Trade-sensitive German shares .GDAXI rose 0.1% and the pan-European stocks benchmark index STOXX 600 .STOXX gained 0.3%, beginning September higher. It fell 1.6% in August as the trade war intensified. [.EU] In China, the CSI300 index .CSI300 gained 1.3%.

Italian bond yields fell toward recent multi-year lows after Italy’s prime minister said at the weekend talks on a new government should be completed by Wednesday. [GVD/EUR] The 5-Star Movement and the Democratic Party held talks over the weekend on cabinet posts and a common agenda.

Deeper problems persist. Euro zone manufacturing activity contracted for a seventh month in August as declining demand sapped optimism, a survey showed.

Sterling fell sharply as Boris Johnson gathered an emergency meeting, fueling expectations the prime minister was preparing to call a snap election should lawmakers this week vote to delay Britain's exit from the European Union. The pound's decline helped the exporter-heavy FTSE 100 .FTSE 1% higher.

In Hong Kong, police and protesters clashed in some of the most intense violence since unrest erupted more than three months ago. China, eager to quell the unrest before the 70th anniversary of the founding of the People's Republic of China on Oct. 1, has accused foreign powers of fomenting the unrest. Hong Kong's Hang Seng .HSI index dropped 0.4%.

New tariffs could chill global growth further, and commodity prices on Monday pointed to little optimism. Safe-haven gold XAU= gained, adding 0.6% to spot prices, while oil and copper lost value. U.S. crude CLcv1 fell 0.6 percent to $54.77 per barrel and Brent LCOcv1 was last at $58.61, down 1.08 percent on the day. [O/R] Copper CMCU3 lost 1.04 percent, selling for $5,617.00 a tonne.

Still, some observers said the market’s initial reaction was likely exaggerated by algorithm-run computers in thin trading on a U.S. holiday.

“(The market move) goes to show you how many data mining algos are involved with equity-linked compared with forex-linked. Was anyone surprised by these tariffs that took effect yesterday?” said Takeo Kamai, head of execution at CLSA in Tokyo.

The dollar index .DXY rose 0.11 percent, with the euro EUR= down 0.18 percent to $1.0969.