➤ Trump announces 10% tariffs on $300B of Chinese goods.
➤ Asian, European stocks slide; Wall Street to open lower.
➤ US Treasury yields drop to lowest since November 2016.
➤ Dollar down as US annual wage growth beats estimates.
U.S. President Donald Trump's announcement of fresh tariffs on Chinese imports sent global equities in the red as investors sought shelter in safe-haven assets, while the dollar remained weak against majors after data showed better-than-expected payroll numbers in July.
Trump announced a 10% levy on the remaining $300 billion of Chinese imports that had yet been untouched by tariffs, effective Sept. 1. The president accused Beijing of reneging on prior commitments to quell the escalating trade spat between the two economic powerhouses.
The 10% rate could rise to up to 25% and "well beyond" depending on how trade discussions between the two sides go, Trump warned, but added that the "future between our two countries will be a very bright one."
Asian stocks tumbled following Trump's announcement, with the MSCI index of Asia-Pacific equities outside Japan falling 1.9%, the Shanghai Composite SE sliding 1.4% and Hong Kong's Hang Seng dipping 2.4%. China has reportedly said it will take countermeasures against the fresh tariffs.
Japan's Nikkei 225 and South Korea's KOSPI dropped 2.1% and 1.0%, respectively, as Seoul announced retaliatory measures against Tokyo's decision to enforce stricter controls on exports to its East Asian neighbor.
In Europe, the FTSE 100 shed nearly 2.0% as of 8:30 a.m. ET, with Royal Bank of Scotland Group PLC shares dropping more 6% as it warned that "economic and political uncertainty" may prevent it from reaching its 2020 targets. Germany's DAX lost 2.6% and France's CAC fell 2.8%, shrugging off reports that Trump will officially announce a trade deal on beef exports with the EU later today.
Futures point to an extended loss at the open for the S&P 500 and the Nasdaq 100, which yesterday closed 0.9% and 0.6% lower, respectively.
The dollar index, which measures the U.S. currency's performance against a basket of major peers, reversed earlier gains to edge 0.2% lower at 98.21, following the new tariff threats and after data showed the U.S. adding 164,000 jobs in July and annual wage growth registering at 3.2%, both beating market estimates.
The new tariffs move "could well give the President the weaker [U.S. dollar] he clearly wants," wrote Michael Hewson from CMC Markets UK.
The Chinese yuan depreciated 0.6% against the dollar to 6.94, its lowest this year. Elsewhere, the euro ticked up 0.1% against the dollar, while the pound fell 0.1%.
The Japanese yen, widely regarded as a safe-haven asset, appreciated 0.6% versus the dollar. Gold advanced 1.5% to $1,453.30 per ounce.
The yield on 10-year U.S. Treasurys lost 6 basis points to 1.84%, the lowest since November 2016, before trimming declines to 1.88% immediately following the nonfarm payroll report. The yield on German bunds with the same maturity shed 4 basis points to negative 0.49%.
Brent crude erased earlier losses to trade 2.6% higher at $62.05 per barrel on the ICE Futures Exchange.
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The day ahead:
8:30 a.m. ET – U.S. employment situation (Econoday consensus: 151,000 nonfarm payrolls month over month)
8:30 a.m. ET – U.S. international trade (Econoday consensus: negative $54.7 billion)
8:30 a.m. ET – Canada merchandise trade (Econoday consensus: negative CA$400 million)
10 a.m. ET – U.S. consumer sentiment (Econoday consensus: 98.4)
10 a.m. ET – U.S. factory orders (Econoday consensus: 0.8%)
1 p.m. ET – U.S. Baker-Hughes rig count