GLOBAL MARKETS-Trump's tariffs jolt global stocks, lift safe-haven assets

© Reuters. GLOBAL MARKETS-Trump's tariffs jolt global stocks, lift safe-haven assets

* 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 took another beating
on Friday while investors piled on to safe-haven assets after
U.S. President Donald Trump said he would slap a 10% tariff on
the remaining $300 billion of Chinese imports from next month.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 0.51% to its lowest level since mid-June
while Japan's Nikkei .N225 tumbled 1.91%.
U.S. stock futures ESc1 lost 0.20% in early Asian trade
after the S&P 500 .SPX skidded 0.90% to hit one-month lows
overnight, while Pan-European Euro Stoxx 50 futures STXEc1
fell 1.5%.
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, including U.S. bonds, the yen and gold while the yuan
and the Australian dollar hit multi-month lows.
Gold XAU= held firm at $1,438.9 per ounce, down 0.4% in
Asia after having risen 2.4% on Thursday, staying near a
six-year high of $1,453 touched two weeks ago.
The yen edged up to 107.25 on the dollar JPY=EBS after
rising 1.3% overnight, its biggest daily gain in more than two
years.
The euro also recovered to $1.1090 EUR=EBS , from a
two-year low of $1.1027 hit in U.S. trade.
In contrast, the risk sensitive Australian dollar dropped to
a seven-month low of $0.6795 AUD=D4 while the offshore yuan
hit a nine-month low of 6.9731 CNH= 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 it to again cut interest rates to
protect the U.S. economy from trade-policy risks after its first
rate cut in more than a decade on Wednesday. Although Fed Chairman Jerome Powell said the rate cut was a
"mid-cycle adjustment" and not a start to a full-blown
rate-cutting cycle, markets aren't fully convinced.
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.
"In the grand scheme of things, it will become clearer and
clearer that the Federal Reserve has started an easing cycle and
will have no choice but to cut rates further," said Akira Takei,
fund manager at Asset Management One.
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. That came on the heels of
surveys in Europe and Asia showing factories under the pump,
with manufacturing activity in many countries shrinking in the
face of intensifying trade frictions. Oil prices bounced back a tad after suffering sharp falls
the previous day.
Brent crude LCOc1 rose 1.2% to $61.24 per barrel, after
having fallen 7.0% on Thursday, its biggest daily percentage
drop since February 2016.
U.S. West Texas Intermediate (WTI) CLc1 crude rose 1.1% to
$54.52, having shed 7.9% on Thursday.

(Editing by Sam Holmes & Shri Navaratnam)