GLOBAL MARKETS-Global stocks pummelled by Trump's tariffs, safe-havens surge

© Reuters. GLOBAL MARKETS-Global stocks pummelled by Trump's tariffs, safe-havens surge

* U.S. stock futures down 0.25%, European futures down 0.9%
* Trump imposes 10% tariffs on rest of U.S. imports from
China
* Interest rate futures price in Fed rate cut in Sept
* Yen marks biggest gain in 2 years, gold near 6-year high

By Hideyuki Sano
TOKYO, Aug 2 (Reuters) - Global stocks are set to take
another beating on Friday after U.S. President Donald Trump said
he would slap a 10% tariff on the remaining $300 billion of
Chinese imports from next month.
U.S. stock futures ESc1 lost 0.25% in early Asian trade
after the S&P 500 .SPX lost 0.90% to hit one-month lows.
Pan-European Euro Stoxx 50 futures STXEc1 fell 0.87% while
Japan's Nikkei .N225 is on course to fall 2.2% based on
futures traded in Chicago NIYcm1 .
Trump's move breaks a truce in the trade war struck in June
and could further disrupt global supply chains. "After U.S.-China summit meeting, people had expected there
would be a lull for quite some time," said Masahiro Ichikawa,
senior strategist at Sumitomo Mitsui DS Asset Management.
"And the market was also relieved by signs of recovery in
the semi-conductor sector. But now investors and companies will
have to revise their such scenarios."
China's state media quickly denounced the move, with the
editor in chief of the Global Times saying on Friday that a
trade deal between the United States and China was now "further
away." The proposed levies triggered a stampede for safe-haven
assets, such as U.S. bonds, the yen and the gold while the yuan
and the Australian dollar hit multi-month lows.
Gold XAU= held firm at $1,442.9 per ounce, having risen
2.4% on Thursday and near a six-year high of $1,453 touched two
weeks ago.
The yen traded at 107.42 to the dollar JPY=EBS after
rising 1.3% overnight, its biggest daily gain in more than two
years.
The euro also recovered to $1.1082 EUR=EBS , from a
two-year low of $1.1027 hit in U.S. trade.
The risk sensitive Australian dollar dropped to a
seven-month low of $0.67965 AUD=D4 while the offshore yuan hit
a nine-month low of 6.9673 to the dollar.
The 10-year U.S. bond yield fell almost 12 basis points on
Thursday to 1.902 percent US10YT=RR , hitting the lowest level
since Nov. 8, 2016, when Trump won a surprise victory in the
presidential election.
Trump's decision has thrown the Federal Reserve another
curve ball that may force the central bank to again cut interest
rates to protect the U.S. economy from trade-policy risks.
The October Fed funds rate futures FFV9 have jumped to now
fully price in a rate cut in September, compared with only
around 60% before the tariff announcement. Another 25 basis
point move is priced in by December.
The new tariffs would hit a wide swathe of consumer goods
from cell phones and laptop computers to toys and footwear, at a
time when the manufacturing sector is already reeling from the
accumulative impact of the trade war.
The U.S. Institute for Supply Management said on Thursday
its index of national factory activity fell to 51.2 last month,
the lowest reading since August 2016.
Brent crude LCOc1 fell 7.0% to settle at $60.50 a barrel
on Thursday, its biggest daily percentage drop since February
2016.
U.S. West Texas Intermediate (WTI) CLc1 crude shed 7.9% to
$53.95 a barrel on Thursday and last stood at $54.4, up 0.8%
from late U.S. levels.

(Editing by Sam Holmes)