(Replaces garbled material in final paragraph with copper
price)
* USD falls, Euro and sterling earlier hit 2-1/2-year lows
* Emerging-market stocks on track for 7th session of losses
By Rodrigo Campos
NEW YORK, Aug 1 (Reuters) - U.S. President Donald Trump sent
financial markets reeling on Thursday when he announced an
additional 10% tariff on $300 billion in Chinese products would
take effect next month.
A more than 1% gain in U.S. stocks evaporated within
minutes, U.S. crude fell more than 8% and emerging market stocks
tumbled to a six-week low.
The moves added to already heightened volatility in markets
a day after the Federal Reserve cut interest rates for the first
time in over a decade, in what was dubbed a "hawkish rate cut."
After the Fed lowered its benchmark rate by 25 basis points
on Wednesday, Chairman Jerome Powell said that the central
bank's first rate cut in over a decade was "not the beginning of
a long series of rate cuts." Trump said he was disappointed in Powell as the U.S.
president had called for a more dovish stance at the Fed, but
his tariff announcement had the effect he wanted on the outlook
for interest rates. Traders are now pricing in two more interest
rate cuts by year's end, and are increasing bets the Fed will
need to ease policy further next year to offset risks from the
escalating trade war. "One thing that's interesting is that after the Fed decision
yesterday Trump tweeted in fairly short order his disapproval of
it, and so he went outside of the lines to start a trade war,"
said Mazen Issa, senior foreign exchange strategist at TD
Securities in New York.
The Dow Jones Industrial Average .DJI fell 197.12 points,
or 0.73 percent, to 26,667.15, the S&P 500 .SPX lost 19.95
points, or 0.67 percent, to 2,960.43 and the Nasdaq Composite
.IXIC dropped 45.07 points, or 0.55 percent, to 8,130.35.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.55 percent.
Emerging market stocks lost 1.38%. Futures in Japan's Nikkei
NKc1 lost 1.59 percent.
The trade war between the world's two largest economies has
been a lingering weight on oil prices, and the market sharply
reversed its recent run-up in prices.
U.S. crude CLc1 fell 7.39 percent to $54.25 per barrel and
Brent LCOc1 was last at $60.90, down 6.38 percent on the day.
U.S. Treasury yields across all maturities fell sharply,
with the benchmark 10-year note hitting its lowest since
November 2016.
The 10-year note US10YT=RR last rose 33/32 in price to
yield 1.9072 percent, from 2.021 percent late on Wednesday.
Copper CMCU3 lost 1.05 percent to $5,865.00 a tonne.
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GRAPHIC-Pound has taken a pounding this year https://tmsnrt.rs/2MzIqTp
GRAPHIC-Global assets in 2019 http://tmsnrt.rs/2jvdmXl
GRAPHIC-Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
GRAPHIC-Emerging markets in 2019 http://tmsnrt.rs/2ihRugV
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