By Hideyuki Sano
TOKYO (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
Pan-European Euro Stoxx 50 futures
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.
The yen traded at 107.42 to the dollar
The euro also recovered to $1.1082
The risk sensitive Australian dollar dropped to a seven-month low of $0.67965
The 10-year U.S. bond yield fell almost 12 basis points on Thursday to 1.902 percent
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
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
U.S. West Texas Intermediate (WTI)
(Editing by Sam Holmes)
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