* USD index weakens after Powell speech, Trump tweets
* Trump threatens further action on China
* U.S. crude posts weekly decline; Brent ekes a gain
* U.S. two-year/10-year yield curve inverts
(Updates with U.S. market close)
By Rodrigo Campos
NEW YORK, Aug 23 (Reuters) - Stocks, the dollar and oil
prices fell on Friday while safe havens rose after U.S.
President Donald Trump threatened to further escalate his trade
war with China "this afternoon," following a new round of
retaliatory tariffs from Beijing.
Earlier on Friday China's Commerce Ministry said in a
statement it would impose tariffs on about $75 billion in
imports from the United States including some agricultural
products, crude oil and small aircraft. Trump responded mid-morning in a series of tweets, writing
that "American companies are hereby ordered to immediately start
looking for an alternative to China." Trump cannot force U.S. companies to abandon China and he
gave no detail on how he might proceed with any such order. But
his series of tweets was seen as a harbinger for yet another
escalation of the trade war.
Trump had not announced more actions against China when
markets closed in New York.
The tweets "certainly heightened concerns about trade and
its drag on global growth," said Craig Bishop, lead strategist
of the fixed income group at RBC Wealth Management at
Minneapolis.
"It has heightened chances of a recession. The President is
his own worst enemy when he tries to manage both fiscal and
monetary policies."
Stocks that benefit during economic expansions fell the most
on Wall Street, also hinting at recession concerns.
"There is a lot of worry here. I would say what (Trump) is
tweeting is disconcerting. It's a fair reaction from the
markets. I don't think anyone thought we'd get to this level,"
said Michael O'Rourke, chief market strategist at JonesTrading.
The Dow Jones Industrial Average .DJI fell 623.34 points,
or 2.37%, to 25,628.9, the S&P 500 .SPX lost 75.84 points, or
2.59%, to 2,847.11 and the Nasdaq Composite .IXIC dropped
239.62 points, or 3%, to 7,751.77.
The pan-European STOXX 600 index .STOXX turned sharply
lower after Trump's tweets, dropping 1% in the last half hour of
trading to close down 0.78%, while MSCI's gauge of stocks across
the globe .MIWD00000PUS dropped 1.57%.
Emerging market stocks lost 0.20%, an index of Latin
American shares .MILA00000PUS dropped more than 3% to close at
its 2019 low and U.S. dollar-denominated Nikkei futures NKc1
fell 2.0%.
OIL, YIELDS FALL
Oil prices fell after China's retaliatory tariffs
announcement highlighted concern that the trade dispute between
the world's two largest economies could slow global growth or
even trigger a recession.
Trump's tweets made matters worse.
"We still view the U.S.-Chinese trade standoff as a major
bearish consideration that will likely be requiring additional
downward oil demand adjustments as this year proceeds," said Jim
Ritterbusch, president of Ritterbusch and Associates.
U.S. crude CLc1 fell 2.67% to $53.87 per barrel and Brent
LCOc1 was last at $59.11, down 1.35% on the day.
Trump's comments came after Federal Reserve Chair Jerome
Powell said the U.S. central bank will "act as appropriate" to
keep the economic expansion on track, but noted rising risks.
Powell's remarks had given markets some relief after the
overnight announcement from Beijing. Trump's tweeted response to
the speech asked who is "our bigger enemy" between Powell and
China's President Xi Jinping.
The two-year/10-year yield curve inverted last week for the
first time since 2007, a signal that a U.S. recession is likely
in one to two years. The curve has traded in and out of
inversion over the past three days.
U.S. Treasury yields fell, with 10-year notes US10YT=RR
last up 22/32 in price to yield 1.5351%, from 1.61% late on
Thursday.
The U.S. dollar fell after Powell's comments and dropped
further after Trump's tweets.
The dollar index .DXY fell 0.47%, with the euro EUR= up
0.53% to $1.1137.
The Japanese yen strengthened 0.95% versus the greenback at
105.45 per dollar, while sterling GBP= was last trading at
$1.228, up 0.24% on the day.
Spot gold XAU= added 1.8% to $1,525.37 an ounce.
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Global assets in 2019 http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets in 2019 http://tmsnrt.rs/2ihRugV
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