With the ensuing trade conflict between the world’s two superpowers feared to stretch longer than expected, involving huge money disbursement from both ends as well, the stock market on Monday suffered a heavy blow. This comes in the wake of recent accusatory remarks by China on the US government making “extravagant expectations” for a truce deal.

“We don’t know what this agreement is (that) the United States is talking about. Perhaps the United States has an agreement they all along had extravagant expectations for, but it’s certainly not a so-called agreement that China agreed to,” said Lu Kang, spokesperson for the Foreign Ministry of China.

As a fallout of the collapsing trade talks, higher tariffs on products of both the countries, along with the US decision to impose a ban on China’s Huawei Technologies, the shares of major companies like Qualcomm, Micron Technology, and Broadcom Inc. have taken a downward plunge.

According to trade analysis reports by Morgan Stanley, failed trade talks between the two countries, as well as higher tariffs on all Sino-US trade, is likely to bring in recession in the world economy. It further added that the current situation could prod the Federal Reserve to cut down interest rates to 0 by 2020; however, delayed policy-making “would mean that we might not be able to avert the tightening of financial conditions and a full-blown recession.”

Meanwhile, there have been no new reports of possible talks between Beijing and China anytime soon. The recent stern remarks from Beijing also hint at low chances of negotiations between the two parties, putting a question mark over the impending meeting between US President Trump and his counterpart Xi Jinping at the G20 Summit in Japan in June.

Lu further added that the previous Sino-US talks failed to be conclusive because the US “tried to achieve unreasonable interests through extreme pressure. From the start, this wouldn’t work.”