* Pound sinks to 28-mth low on heightened no-deal Brexit
woes
* European stocks hurt as Trump fires China warning, results
drag
* BOJ stands pat on monetary policy, says will ease if
needed
* World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Marc Jones
LONDON, July 30 (Reuters) - A snarling warning from U.S.
President Donald Trump ahead of trade talks with China rattled
stock markets on Tuesday, as brewing no-deal Brexit worries also
roughed up the pound and Irish bonds again.
With the Federal Reserve widely expected to deliver on
Wednesday its first cut in U.S. rates since the financial crisis
and plenty of European traders already on beach breaks, it was
not supposed to be so stormy.
But Europe's already flailing big bourses buckled badly
.GDAXI LIVE/ along with Wall Street futures .N as Trump
warned China against trying to wait out his first term in office
to finalise a trade deal. It set the tone for a new round of U.S-China talks in
Shanghai and as if that was not tough enough, Trump also trolled
Beijing for its economy doing "very badly" for good measure.
Germany's DAX and carmakers took the main hit, both slumping
around 2% in what could be Frankfurt's worst day since February.
S&P 500 and Dow futures also dropped around 0.5% with Apple
results due after the bell also in focus. .N LIVE/
"The problem with them (China) waiting," Trump tweeted "is
that if & when I win (2020 election), the deal that they get
will be much tougher than what we are negotiating now ... or no
deal at all."
Woes were also continuing for the pound following its worst
day of the year so far.
It took another 0.5% swoon against all the major currencies
after Monday had seen new UK Prime Minister Boris Johnson call
his predecessor's Brexit plans dead and new foreign minister and
former Brexit chief, Dominic Raab, label the European Union
"stubborn".
Sterling GBP=D3 fell as far as $1.2120, its lowest against
the dollar since March 2017. It did eventually find some support
but not before it had also dropped to its weakest against the
euro since Sept 2017 too as it hit 91.85 pence.
Options markets were still pointing to more pain as well.
Three-month implied volatility, a contract that expires just
before the Oct. 31 Brexit deadline, jumped to over 11 vols, the
highest since before March 29, the original date for Britain to
leave the European Union.
"The pound is in a very precarious state, it is as simple as
that," said TD Securities' European head of currency strategy
Ned Rumpeltin.
"We are now in a different regime," he said, referring to
Johnson's explicit agenda of taking Britain out of the EU,
whether or not transitional trading agreements are in place.
It was not just sterling reeling either.
Irish government bond yield spreads over Germany hit their
widest levels in over a month at 59 basis points, on worries
about the damage a no-deal Brexit would do to Ireland's economy.
Other euro zone government bond yields were holding near
recent lows ahead of the Federal Reserve meeting which is
expected to deliver a 25 basis point rate cut on Wednesday and
potentially signal more on the way.
Germany's 10-year government bond yield DE10YT=RR was
hovering near the minus 0.40% mark. GVD/EUR
FED AHEAD
European shares had also slipped on grim forecasts from
German chemicals and drugs giant Bayer and airline Lufthansa,
and despite some early pound-induced resistance even London's
blue-chip FTSE index .FTSE could stay out of the red. .EU
With concerns about global growth still bubbling among
investors, a GfK survey also showed German consumer morale
worsening for the third month in a row heading into August as
trade disputes bit in Europe's biggest exporter.
Asia in contrast had been a bit more positive overnight.
Japan's Nikkei .N225 rose 0.4%, showing limited reaction
to the Bank of Japan's widely anticipated decision to stand pat
on monetary policy. Shanghai .SSEC rose 0.3% and Hong Kong's
Hang Seng edged up 0.2%.
Australian stocks .AXJO stole the glory again though with
another record high, as buoyant mining shares added to
tech-driven gains the previous day.
The BOJ added that it would ease policy again "without
hesitation" if the economy loses momentum for achieving the
central bank's 2% inflation target.
It set investors up nicely for Wednesday Fed decision on its
first rate cut in over a decade.
Zhiwei Ren, Managing Director and Portfolio Manager at Penn
Mutual Asset Management said he was in the camp expecting a 25
basis point cut, though there was a chance of 50 basis points.
"I probably just buy some call options on the S&P 500," to
hedge in case of the 50 bps move, Ren said.
But "It is hard to reconcile this kind of aggressive cut
with the current economic data... If you look at the data and
the earning reports the (U.S.) consumer is very strong."
Among commodities, crude oil prices extended the previous
day's gains, with the Fed's expected easing fuelling optimism
that it would boost the economy and fuel demand in the world's
biggest oil consumer. O/R
U.S. crude futures CLc1 were up 0.65% at $57.24 per barrel
and Brent crude LCOc1 added 0.6% to $64.09. Gold XAU= was
down 0.1% at $1,425 per ounce.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Sterling vs other world currencies in 2019 https://tmsnrt.rs/2ypmwtS
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>