Associated Press

US stocks dropped on Monday following reports China will adopt a tougher negotiating stance in trade talks with the US this week.

Chinese officials don't plan to offer concessions such as reforms to industrial policy or government subsidies, Bloomberg reported, citing people familiar with the matter.

"Beijing is about to make another epic miscalculation," one analyst said. "Trump ALWAYS escalates when put under pressure."

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US stocks dropped on Monday following reports China will adopt a tougher negotiating stance in trade talks with the US this week.

Chinese officials don't plan to offer concessions such as reforms to industrial policy or government subsidies, Bloomberg reported, citing people familiar with the matter. The tougher stance could narrow the scope of a potential agreement to end the trade war between the world's two largest economies, which is set to escalate with higher tit-for-tat tariffs in the absence of a deal.

China may be seeking to capitalize on the Trump administration's ongoing challenges, which include a mounting impeachment crisis and growing evidence of a slowing US economy. However, analysts are concerned the strategy could backfire.

"Beijing is about to make another epic miscalculation," Michael Every, senior Asia-Pacific strategist at Rabobank, said in a research note. "Trump ALWAYS escalates when put under pressure, and has never shown anything so far but a tendency to raise tariffs when disappointed."

"If China thinks Trump is going to crumble now just because he faces possible impeachment, they are about to get a very nasty surprise — and hence so are markets," he added.

Traders in Europe also faced headwinds. Factory orders in Germany fell 0.6% month-on-month in September, outstripping the Reuters consensus forecast of a 0.3% decline. The UK remains mired in uncertainty, as Prime Minister Boris Johnson won't leave Downing Street even if he loses a confidence vote, and plans to challenge the queen to fire him instead, according to the Sunday Times.

Here's the market roundup as of 9:07 a.m. in New York:

US stocks opened lower with the Dow Jones Industrial Average and S&P 500 down 0.3%, and the Nasdaq down 0.2%.

and down 0.3%, and the down 0.2%. European equities have rallied with Germany's DAX up 0.4%, Britain's FTSE 100 up 0.5%, and the Euro Stoxx 50 up 0.5%.

up 0.4%, Britain's up 0.5%, and the up 0.5%. In Asia, Chinese and Hong Kong markets were shut for holidays. Japan's Nikkei fell 0.2%.

fell 0.2%. Oil prices have climbed with West Texas Intermediate crude up 1.5% at $53.60, and Brent crude up 1.3% at $59.10.

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