Afp Business Asia

India’s central bank holds rates amid US tariff battle

India’s central bank maintained its key interest rate at 5.50 percent on Wednesday, as US President Donald Trump ramped up threats to raise tariffs on New Delhi because of Russian oil purchases.The Reserve Bank of India (RBI) kept steady the repurchase rate, the level at which it lends to commercial banks, after a unanimous vote by a six-member panel.A majority of analysts had forecast a pause following a surprise 50-basis-point reduction in June.Bank governor Sanjay Malhotra said global trade challenges remained but that the “Indian economy holds bright prospects in the changing world order”.”We have taken decisive and forward looking measures to support growth,” he said in a statement.The RBI cut rates for the first time in nearly five years in February and followed up with two other reductions in April and June.The Indian government has forecast above-average monsoon rains, which observers say should help growth, as higher agricultural output will aid the rural economy and keep vegetable prices stable.But Trump’s announcement Tuesday to “substantially” hike tariffs on Indian imports because of New Delhi’s purchases of Russian oil has added pressure on India.Before that threat was made, the existing 10 percent US tariff on Indian products was already due to rise to 25 percent on Thursday.Malhotra acknowledged that “the uncertainties of tariffs are still evolving” even though “growth is robust”. Trump’s pressure on India comes after he signalled fresh sanctions on Russia if it did not make progress by Friday towards a peace deal with Ukraine.India, the world’s most populous country, is not an export powerhouse, but the United States is its largest trading partner.

Investors walk fine line as Trump tariffs temper rate hopes

Asian investors trod warily Wednesday amid lingering uncertainty over Donald Trump’s trade war, while another round of data indicated further weakness in the US economy but added interest rate cut speculation.The US president’s claim that Washington was “very close to a deal” to extend a China truce provided some optimism, though that was tempered by his warning of fresh levies on pharmaceuticals and chips.After a strong start to the week sparked by hopes that painful jobs data will force the US Federal Reserve to lower rates next month, another batch of figures added fuel to the fire.A closely watched index of services activity showed it had barely grown in July as companies contend with weaker hiring conditions and rising prices.The news came after Friday’s jobs data revealed far fewer US jobs were created than expected in May, June and July.”Market pricing has moved aggressively in favour of a September rate cut by the Federal Reserve, after a weak July jobs report and ugly revisions to May and June signalled the US labour market may finally be cracking under the pressure of tariffs,” said Neil Wilson at Saxo Markets. “The data pushed the US closer to stagflationary territory,” he said.”So far, the market has held up and looked beyond the tariff risks, but we may at last be seeing the hard data finally catch up with the soft survey data.”But while bets on a rate cut in September have soared, he remained unsure that such a move was a certainty.Stocks fluctuated through the morning.Tokyo, Shanghai, Sydney, Wellington, Manila and Jakarta rose but Hong Kong, Singapore, Seoul and Taipei were in the red.Confidence remains thin as Trump’s tariff threats linger, with several countries — including India and Switzerland — still to hammer out deals before his delayed deadline Thursday, and agreed levies with others begin to kick in.In his latest salvo, Trump told CNBC he was looking at hitting pharmaceuticals with tolls that eventually reach 250 percent, while semiconductors were also in the firing line. He has said he will also hammer India over its purchases of Russian oil.Still, Trump did strike a positive note on China, which is in talks with US officials to continue a truce agreed in May that saw the world’s two largest economies pare down their eye-watering triple-digit tariffs.Regarding Chinese President Xi Jinping, Trump told CNBC’s “Squawk Box” that “I’ll end up having a meeting before the end of the year, most likely, if we make a deal.”If we don’t make a deal, I’m not going to have a meeting. I mean, you know, what’s the purpose of meeting if we’re not going to make a deal?”But we’re getting very close to a deal.”He added that his relationship with Xi was “very good” and that “I think we’ll make a good deal. It’s not imperative, but I think we’re going to make a good deal”. – Key figures at around 0230 GMT -Tokyo – Nikkei 225: UP 0.6 percent at 40,802.73 (break)Hong Kong – Hang Seng Index: DOWN 0.2 percent at 24,844.94Shanghai – Composite: UP 0.1 percent at 3,619.78Euro/dollar: DOWN at $1.1570 from $1.1582 on TuesdayPound/dollar: UP at $1.3303 from $1.3294Dollar/yen: UP at 147.61 yen from 147.55 yenEuro/pound: DOWN at 86.97 pence from 87.01 penceWest Texas Intermediate: UP 0.5 percent at $65.46 per barrelBrent North Sea Crude: UP 0.5 percent at $67.96 per barrelNew York – Dow: DOWN 0.1 percent at 44,111.74 (close)London – FTSE 100: UP 0.2 percent at 9,142.73 (close)

Trump targets tariff evasion, with eye on China

As the United States ramps up tariffs on major trading partners globally, President Donald Trump is also disrupting strategies that could be used — by Chinese companies or others — to circumvent them.Goods deemed to be “transshipped,” or sent through a third country with lower export levies, will face an additional 40-percent duty under an incoming wave of Trump tariffs Thursday.The latest tranche of “reciprocal” tariff hikes, taking aim at what Washington deems unfair trade practices, impacts dozens of economies from Taiwan to India.The transshipment rule does not name countries, but is expected to impact China significantly given its position as a manufacturing powerhouse.Washington likely wants to develop supply chains that are less reliant on China, analysts say, as tensions simmer between the world’s two biggest economies and the US sounds the alarm on Beijing’s excess industrial capacity.But “it’s a little more about the short-term effect of strengthening the tariff regime than it is about a decoupling strategy,” said Josh Lipsky, chair of international economics at the Atlantic Council.”The point is to make countries worried about it and then have them err on the side of not doing it, because they know that Trump could then jack up the tariff rates higher again,” he added, referring to tariff evasion.The possibility of a sharply higher duty is a “perpetual stick in the negotiations” with countries, said Richard Stern, a tax and budget expert at the conservative Heritage Foundation.He told AFP that expanding penalties across the globe takes the focus away from Beijing alone.- Alternative supplies -Experts have noted that Vietnam was the biggest winner from supply chain diversions from China since the first Trump tariffs around 2018, when Washington and Beijing engaged in a trade war.And Brookings Institution senior fellow Robin Brooks pointed to signs this year of significant transshipments of Chinese goods.He noted in a June report that Chinese exports to certain Southeast Asian countries started surging “anomalously” in early 2025 as Trump threatened widespread levies.While it is unclear if all these products end up in the United States, Brooks cast doubt on the likelihood that domestic demand in countries like Thailand and Vietnam rocketed right when Trump imposed duties.”One purpose of the transshipment provisions is to force the development of supply chains that exclude Chinese inputs,” said William Reinsch, senior adviser at the Center for Strategic and International Studies.”The other purpose is to push back on Chinese overcapacity and force them to eat their own surpluses,” he added.But Washington’s success in the latter goal depends on its ability to get other countries on board.”The transshipment penalties are designed to encourage that,” Reinsch said.Lipsky added: “The strategy that worked in the first Trump term, to try to offshore some Chinese manufacturing to other countries like Vietnam and Mexico, is going to be a much more difficult strategy to execute now.”- China response? -Lipsky noted that Beijing could see the transshipment clause as one targeting China on trade, “because it is.””The question is, how China takes that in the broader context of what had been a thawing relationship between the US and China over the past two months,” he added.While both countries temporarily lowered triple-digit tariffs on each other’s exports, that truce expires August 12.The countries are in talks to potentially extend the de-escalation, although the final decision lies with Trump.It will be tough to draw a line defining product origins, analysts say.Customs fraud has been illegal for some time, but it remains unclear how Washington will view materials from China or elsewhere that have been significantly transformed.The burden lies with customs authorities to identify transshipment and assess the increased duties.”That will be difficult, particularly in countries that have close relations with China and no particular incentive to help US Customs and Border Protection,” Reinsch added.

Wall Street stocks end lower as rally peters out

Wall Street stocks fell Tuesday as a rally ran out of steam following lackluster economic data, while investors monitor ongoing trade talks ahead of new tariff hikes set to take effect later this week.US President Donald Trump told CNBC he plans fresh tariffs on imported pharmaceuticals and semiconductors. Trump also said he expects to raise the US tariff on Indian imports due to the country’s purchases of Russian oil.The statements come before a separate set of tariff hikes goes into force on dozens of economies later this week. Swiss officials traveled to Washington Tuesday to try to strike a last-minute deal.Investors also digested an index of US services activity that came in at 50.1 percent, just barely in growth mode as companies contend with weaker hiring conditions and increased pricing pressure.The report comes on the heels of jobs data last Friday that pointed to slowing in the labor market. On the positive side, “a weaker economy could mean more rate cuts from the Fed,” said Adam Sarhan of 50 Park Investments.After opening higher, US indices fell into negative territory, with the S&P 500 ending down 0.5 percent.European markets ended mixed, with Paris dipping into the red, while oil prices retreated further on worries about the demand outlook.Swiss leaders flew to Washington on Tuesday in a last-ditch effort to avoid a hefty 39-percent tariff.Meanwhile, the European Union on Tuesday announced the suspension of its retaliatory tariffs on US goods worth 93 billion euros ($107 billion) after Brussels struck a deal with Washington last month.Among individual companies, Palantir Technologies jumped 7.9 percent after reporting its first quarter with more than $1 billion in revenues. The data analysis and artificial intelligence company also raised its full-year revenues forecast.Pfizer was another big winner after earnings as the drugmaker reported a big increase in profits to $2.9 billion behind higher sales of Covid-19 products and lower expenses. Shares jumped 5.2 percent.Diageo, the maker of Guinness stout and Smirnoff Vodka, rose 4.9 percent after raising its cost-savings targets following a sharp drop profits to the hit from US tariffs.- Key figures at around 2100 GMT -New York – Dow: DOWN 0.1 percent at 44,111.74 (close)New York – S&P 500: DOWN 0.5 percent at 6,299.19 (close)New York – Nasdaq Composite: DOWN 0.7 percent at 20,916.55 (close)London – FTSE 100: UP 0.2 percent at 9,142.73 (close)Paris – CAC 40: DOWN 0.1 percent at 7,621.04 (close)Frankfurt – DAX: UP 0.4 percent at 23,846.07 (close)Tokyo – Nikkei 225: UP 0.6 percent at 40,549.54 (close)Hong Kong – Hang Seng Index: UP 0.7 percent at 24,902.53 (close)Shanghai – Composite: UP 1.0 percent at 3,617.60 (close)Euro/dollar: UP at $1.1582 from $1.1571 on MondayPound/dollar: UP at $1.3294 from $1.3285Dollar/yen: UP at 147.55 yen from 147.09 yenEuro/pound: DOWN at 87.01 pence from 87.10 penceWest Texas Intermediate: DOWN 1.7 percent at $65.16 per barrelBrent North Sea Crude: DOWN 1.7 percent at $67.64 per barrelburs-jmb/st

US trade gap shrinks on imports retreat as tariffs fuel worries

The US trade gap narrowed in June, government data showed Tuesday, as imports pulled back more than exports while businesses grappled with President Donald Trump’s tariffs on allies and competitors alike.The overall trade deficit in the world’s biggest economy narrowed by 16 percent to $60.2 billion, down from a revised $71.7 billion figure in May, the Department of Commerce said.The narrowing was more than analysts expected but largely reflected a drop in goods imports — including consumer goods as Trump’s wide-ranging tariffs added to businesses’ costs of bringing in foreign products.In April, Trump imposed a 10-percent duty on most US trading partners and he has also slapped much steeper tariffs on steel, aluminum and autos.This baseline tariff is set to rise to varying levels for dozens of economies including Japan and the European Union come Thursday.Given that plans have been set out for higher rates to take effect, policy uncertainty has eased somewhat, said Nationwide financial markets economist Oren Klachkin.”But businesses hoping tariffs were just threats must now adjust to the reality they are here to stay,” he added in a note.”We think the negative impact of high tariff rates will outweigh any positives from lower policy uncertainty,” Klachkin said.The June deficit narrowed on the back of a fall in imports, by 3.7 percent to $337.5 billion, while exports also dropped by 0.5 percent to $277.3 billion.The drop in imports came as those of consumer goods decreased $8.4 billion, while those of industrial supplies and materials fell by $2.7 billion. Imports of autos and parts also dropped by $1.3 billion.The retreat in exports, meanwhile, came as goods exports declined by $1.3 billion, with decreases seen in industrial supplies as well.The goods deficit with China dropped by $4.6 billion, to $9.4 billion in June.Washington and Beijing slapped escalating tariffs on each other’s products in April, reaching prohibitive triple-digit levels and snarling supply lines between the world’s two biggest economies.But in May, the countries reached a temporary agreement to bring these duties to a lower level until August 12.

US data deflates stocks rebound

A stock market rebound  lost traction on Tuesday after data showed inflation gathering steam in the US, complicating the picture for interest rate cuts.Meanwhile oil prices retreated further after US President Donald Trump renewed his threat to raise tariffs on India over its purchases of Russian crude.Wall Street’s main stock indices had opened higher Tuesday before turning lower. European markets ended mixed, with Paris dipping into the red.Global stocks had jumped on Monday, recovering ground lost after data released on Friday showed weakness in the US jobs market, raising concerns that the world’s biggest economy is in worse shape than previously thought.The rebound was fuelled by healthy company earnings and by bets that a slowing US economy would prompt the Federal Reserve to cut interest rates in September.Lower interest rates are positive for stocks as companies can borrow at better rates, as can consumers.Despite pressure from Trump, the Fed has said it will rely on the latest data on the inflation outlook to make its decision.Data released Tuesday showed that modest growth in the US services sector pretty much evaporated in July, with companies reporting increases in prices due to tariffs that Trump has imposed on US trading partners.”The 50.1 headline reading was more than one whole point below 51.5 expected and suggests growth in the dominant services sector is stalling,” said City Index and FOREX.com analyst Fawad Razaqzada.A reading above 50 percent indicates growth.He pointed to “alarming” details in the report, such as an unexpected rise in prices paid by companies.This “points to inflationary pressures building into the dominant services sector of the economy, making it difficult for the Fed to justify cutting rates,” said Razaqzada.CME Group’s FedWatch tool still showed investors have largely priced in two interest rate cuts — in September and October — and see another one as possible in the third and final Fed meeting this year in December.Some analysts were sceptical of the chances of  rate cut, however.”I continue to believe the Fed will not reduce rates at all this year given rising inflation caused by tariffs and a relatively stable unemployment rate,” said Lazard chief market strategist Ronald Temple.Trump’s fresh tariffs on dozens of US trade partners are set to kick in on August 7, almost one week later than planned.Swiss leaders flew to Washington on Tuesday in a last-ditch effort to avoid a hefty 39-percent tariff.Meanwhile, the European Union on Tuesday announced the suspension of its retaliatory tariffs on US goods worth 93 billion euros ($107 billion) after Brussels struck a deal with Washington last month.Trump on Tuesday renewed his threat to impose tariffs on imported pharmaceuticals of up to 250 percent, although he said the tariff would initially start small to allow companies time to move production to the United States.Investors shrugged off the threat, with share prices of European pharmaceuticals, which have announced major investments to build manufacturing sites in the US, mostly higher.Trump also indicated that an announcement of tariffs on semiconductors — key to all electronics from smartphones to AI datacentres — could come as soon as next week.Shares in AI chipmaker NVIDIA were down 1.9 percent in midday trading.- Key figures at around 1530 GMT -New York – Dow: DOWN 0.3 percent at 44,034.25 pointsNew York – S&P 500: DOWN 0.5 percent at 6,298.16 New York – Nasdaq Composite: DOWN 0.5 percent at 20,941.95London – FTSE 100: UP 0.2 percent at 9,142.73 (close)Paris – CAC 40: DOWN 0.1 percent at 7,621.04 (close)Frankfurt – DAX: UP 0.4 percent at 23,846.07 (close)Tokyo – Nikkei 225: UP 0.6 percent at 40,549.54 (close)Hong Kong – Hang Seng Index: UP 0.7 percent at 24,902.53 (close)Shanghai – Composite: UP 1.0 percent at 3,617.60 (close)Euro/dollar: UP at $1.1581 from $1.1573 on MondayPound/dollar: UP at $1.3300 from $1.3285Dollar/yen: UP at 147.41 yen from 147.08 yenEuro/pound: DOWN at 87.05 pence from 87.11 penceWest Texas Intermediate: DOWN 1.4 percent at $65.34 per barrelBrent North Sea Crude: DOWN 1.4 percent at $67.83 per barrelburs-rl/gv

Swiss president rushes to US to avert steep tariffs

Switzerland’s president and economy minister flew to Washington on Tuesday in a last-minute push to stop steep new tariffs that have blindsided the Alpine country.Switzerland faces a 39-percent duty, one of the highest among the dozens of economies that will be hit by new tariffs expected to come into force from Thursday.President Karin Keller-Sutter and Economy Minister Guy Parmelin were heading to Washington “to facilitate meetings with the US authorities at short notice and hold talks with a view to improving the tariff situation for Switzerland”, the government said in a statement.”The aim is to present a more attractive offer to the United States in a bid to lower the level of reciprocal tariffs for Swiss exports, taking US concerns into account.”US President Donald Trump had originally threatened in April to slap a 31-percent tariff on Switzerland.But he surprised the export-driven country last week when he decided to hike the rate to 39 percent despite numerous discussions between Swiss and US officials aimed at reaching a deal.The Swiss government noted that the country will be hit by much higher tariffs than what other wealthy economies, such as Britain, Japan or the European Union, are facing.During an extraordinary meeting on Monday, the government “reaffirmed that it was keen to pursue talks with the United States on the tariff situation”, Tuesday’s statement said.”For this reason,” the president and the economy minister “are to travel to Washington on Tuesday”.US Trade Representative Jamieson Greer, however, told CBS television on Sunday that the tariffs on global trading partners, which are coming into force this week, “are pretty much set”.And as Keller-Sutter headed to Washington, Trump signalled that a separate “small” tariff on imports of pharmaceuticals from around the world — a key sector for Switzerland — could come “within the next week”.But the sector-specific tariff could rise to 150 percent in a year and eventually be as high as 250 percent, he added.Pharmaceuticals represented 60 percent of Swiss goods exports to the United States last year.- Swiss surplus -Keller-Sutter and Parmelin took off on Tuesday morning, a Swiss government official said.They were accompanied by a small delegation, including the heads of the economy and international finance departments, but the official declined to give details about the potential meetings.The government said it will “issue a statement as soon as there are any relevant developments for the public”.The United States is a key trading partner for Switzerland, taking 18.6 percent of its total exports last year, according to Swiss customs data.Keller-Sutter has said Trump believes that Switzerland “steals” from the United States by enjoying a trade surplus of 40 billion Swiss francs ($50 billion).Swiss companies have urged the government to negotiate a lower tariff.”I am convinced that Donald Trump wants to make a deal and show it to his US voters,” Nik Hayek, the head of watch firm Swatch, told Le Temps newspaper in an interview published late Monday.But, Hayek added, “President Karin Keller-Sutter has to react and find a solution in person there.”

Stocks higher on US Fed rate cuts bets

Global stock markets rose Tuesday as investors grew increasingly confident that the US Federal Reserve will cut interest rates next month.The gains, helped also by some strong earnings and generally easing concerns about tariffs, followed strong advances on Monday.The dollar jumped against the euro and yen.Oil prices retreated after US President Donald Trump renewed his threat to raise tariffs on India over its purchases of Russian crude.Wall Street was steady at the opening bell, with the Dow flat and the S&P 500 and Nasdaq Composite edging up. However they quickly pushed higher.”While sentiment towards equity markets continues to remain positive for the time being, that’s not to say things will remain rosy in the coming weeks,” said City Index and FOREX.com analyst Fawad Razaqzada, pointing to high stock valuations amid a weakening economy.Briefing.com analyst Patrick O’Hare said “expectations of lower interest rates in the months ahead” were providing support for equities.Data released on Friday showing weakness in the US jobs market caused stock markets to slump as they raised concerns that the world’s biggest economy is in worse shape than expected.Stocks rebounded on Monday, however, as those worries fanned bets that the Fed will cut interest rates in September.According to CME Group’s FedWatch tool, investors have priced in two interest rate cuts — in September and October — and see another one as possible in the third and final meeting in December.Some analysts remained sceptical, however.”I continue to believe the Fed will not reduce rates at all this year given rising inflation caused by tariffs and a relatively stable unemployment rate,” said Lazard chief market strategist Ronald Temple.European markets were solidly higher in afternoon trading.”European markets continue to wave off any concerns around the direction of travel for the US economy and Thursday’s looming tariff day,” noted Joshua Mahony, chief market analyst at Rostro trading group.Trump’s fresh tariffs on dozens of US trade partners are set to kick in on August 7, almost one week later than planned.The European Union on Tuesday announced the suspension of its retaliatory tariffs on US goods worth 93 billion euros ($107 billion) after Brussels struck a deal with Washington last month.”The commission has today adopted the necessary legal procedures to suspend the implementation of our EU countermeasures, which were due to kick in on August 7,” EU trade spokesman Olof Gill said.Trump on Tuesday renewed his threat to impose tariffs on imported pharmaceuticals of up to 250 percent, although he said the tariff amounts would start small.Investors shrugged off the threat, with share prices of European pharmaceutical firms, which have announced major investments to build manufacturing sites in the United States as Trump has demanded, mostly higher.Ahead of the new deadline, Mahony said traders were focused “on the continued strength seen in second-quarter earnings season and the new dovish outlook for the Federal Reserve”.On the corporate front, shares in BP climbed 2.5 percent in London midday deals after the British energy giant surprised with better-than-expected earnings in the second quarter.- Key figures at around 1330 GMT -New York – Dow: FLAT at 44,168.17 pointsNew York – S&P 500: UP less than 0.1 percent at 6,334.05 New York – Nasdaq Composite: UP 0.1 percent at 21,075.81London – FTSE 100: UP 0.4 percent at 9,168.87 Paris – CAC 40: UP 0.3 percent at 7,651.60 Frankfurt – DAX: UP 0.8 percent at 23,941.01Tokyo – Nikkei 225: UP 0.6 percent at 40,549.54 (close)Hong Kong – Hang Seng Index: UP 0.7 percent at 24,902.53 (close)Shanghai – Composite: UP 1.0 percent at 3,617.60 (close)Euro/dollar: DOWN at $1.1551 from $1.1573 on MondayPound/dollar: UP at $1.3293 from $1.3285Dollar/yen: UP at 147.53 yen from 147.08 yenEuro/pound: DOWN at 86.90 pence from 87.11 penceWest Texas Intermediate: DOWN 1.5 percent at $65.29 per barrelBrent North Sea Crude: DOWN 1.3 percent at $67.84 per barrelburs-rl/rlp

Stocks climb tracking tariffs, US Fed

European and Asian stock markets rose Tuesday as tariff threats eased and as investors grow increasingly confident that the US Federal Reserve will cut interest rates next month.The gains, helped also by some strong earnings, tracked Monday’s rally on Wall Street.The dollar jumped against the euro and yen.Oil prices retreated after US President Donald Trump’s threat to raise tariffs on India over its purchases of Russian crude.”European markets continue to wave off any concerns around the direction of travel for the US economy and Thursday’s looming tariff day,” noted Joshua Mahony, chief market analyst at Rostro trading group.Trump’s fresh tariffs on dozens of US trade partners are set to kick in on August 7, almost one week later than planned.The European Union on Tuesday announced the suspension of its retaliatory tariffs on US goods worth 93 billion euros ($107 billion) after Brussels struck a deal with Washington last month.”The commission has today adopted the necessary legal procedures to suspend the implementation of our EU countermeasures, which were due to kick in on August 7,” EU trade spokesman Olof Gill said.Ahead of the new deadline, Mahony said traders were focused “on the continued strength seen in second-quarter earnings season and the new dovish outlook for the Federal Reserve”.Weakness in the US jobs market has raised concerns that the world’s biggest economy is in worse shape than expected, fanning bets that the Fed will cut interest rates in September.Some analysts remained sceptical, however.”I continue to believe the Fed will not reduce rates at all this year given rising inflation caused by tariffs and a relatively stable unemployment rate,” said Lazard chief market strategist Ronald Temple.On the corporate front, shares in BP climbed 2.4 percent in London midday deal after the British energy giant surprised with better-than-expected earnings in the second quarter.- Key figures at around 1045 GMT -London – FTSE 100: UP 0.4 percent at 9,160.14 pointsParis – CAC 40: UP 0.2 percent at 7,646.95 Frankfurt – DAX: UP 0.8 percent at 23,938.65Tokyo – Nikkei 225: UP 0.6 percent at 40,549.54 (close)Hong Kong – Hang Seng Index: UP 0.7 percent at 24,902.53 (close)Shanghai – Composite: UP 1.0 percent at 3,617.60 (close)New York – Dow: UP 1.3 percent at 44,173.64 (close)Euro/dollar: DOWN at $1.1543 from $1.1573 on MondayPound/dollar: UP at $1.3290 from $1.3285Dollar/yen: UP at 147.59 yen from 147.08 yenEuro/pound: DOWN at 86.87 pence from 87.11 penceWest Texas Intermediate: DOWN 1.1 percent at $65.54 per barrelBrent North Sea Crude: DOWN 1.0 percent at $68.08 per barrel

Asian markets track Wall St rally on Fed rate cut bets

Stock markets rose Tuesday as investors grow increasingly confident the Federal Reserve will cut interest rates next month, despite concerns about the US economy and Donald Trump’s tariffs.The gains tracked a rally on Wall Street, where traders rediscovered their mojo following Friday’s sell-off that was fuelled by news that fewer-than-expected American jobs were created in July, while the previous two months’ figures were revised down sharply.The reading raised concerns the world’s biggest economy was in worse shape than expected, though it also fanned bets the Fed will slash in September, with markets pricing the chance of a 25-basis-point reduction at about 95 percent, according to Bloomberg. There is also talk that bank officials could go for twice as much as that.”The narrative flipped fast: soft jobs equals soft Fed, and soft Fed equals risk-on,” said Stephen Innes at SPI Asset Management.But he warned that “if cuts are coming because the labour market is slipping from ‘cooling’ to ‘cracking’, then we’re skating closer to the edge than we care to admit”.He added: “That dichotomy — between rate cuts as stimulus and rate cuts as warning flare — is now front and center.”If the Fed moves proactively to shield markets from the tariff storm and weak labour, the equity rally has legs. But if policymakers are reacting to a sharper downturn that is in full swing, the runway shortens quickly.”Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei and Jakarta were all in the green, along with London, Paris and Frankfurt.However, while there is a broad expectation that the Fed will cut rates, some analysts remained sceptical.”I continue to believe the Fed will not reduce rates at all this year given rising inflation caused by tariffs and a relatively stable unemployment rate,” Lazard chief market strategist Ronald Temple wrote.”I would align with the majority of the FOMC members who believe it is more appropriate to hold policy constant until there is greater clarity in terms of the effects of tariffs and stricter immigration enforcement on inflation and employment.”And economists at Bank of America said: “Our base case since January has been that the Fed won’t cut rates this year. The… downward revisions to nonfarm payrolls in the July jobs report challenges our view.”It now appears that the labour market stalled in May and June. This increases the probability of what we view as the most likely alternate scenario: ‘bad cuts,’ due to deterioration in the labor market. But we are sticking with our Fed call for now.”Traders were keeping an eye on trade talks between Washington and dozens of its trade partners after Trump imposed tariffs of between 10 and 41 percent on them.Among those to strike a deal is India, which Trump on Monday threatened to hit with “substantially” higher rates over its purchases of Russian oil. Shares in Mumbai edged down.- Key figures at around 0810 GMT -Tokyo – Nikkei 225: UP 0.6 percent at 40,549.54 (close)Hong Kong – Hang Seng Index: UP 0.7 percent at 24,902.53 (close)Shanghai – Composite: UP 1.0 percent at 3,617.60 (close)London – FTSE 100: UP 0.3 percent at 9,152.80Dollar/yen: UP at 147.39 yen from 147.08 yen on MondayEuro/dollar: DOWN at $1.1543 from $1.1573Pound/dollar: DOWN at $1.3270 from $1.3285Euro/pound: DOWN at 86.98 pence from 87.11 penceWest Texas Intermediate: DOWN 0.2 percent at $66.18 per barrelBrent North Sea Crude: DOWN 0.1 percent at $68.69 per barrelNew York – Dow: UP 1.3 percent at 44,173.64 (close)