Trump’s Tariffs on Drugs Hit Asian Shares; Strong US Data Clouds Fed Outlook

GLOBAL MOOD: Risk-off
Drivers: US Tariffs, Fed Rate Outlook, Inflation Concerns, Labour Market

Asian shares slipped after Trump slapped fresh tariffs on pharma, trucks, and furniture. Investors stayed risk-off as trade tensions deepened, while strong US GDP and labour data tempered hopes of aggressive Fed easing.

TODAY’S WATCHLIST
- ECB President Lagarde Speech
- India Oct-Mar Borrowing Plan

THE BIG STORY
The United States will impose a 100% tariff on imports of branded or patented pharmaceutical products from October 1, unless the manufacturer has already begun building a plant in the US, President Donald Trump announced on Thursday. The move is part of a broader set of tariffs, including 25% on heavy-duty trucks, 50% on kitchen cabinets, 50% on bathroom vanities, and 30% on upholstered furniture, all taking effect from October 1. Trump’s latest tariffs reflect his administration’s ongoing national security probes into imports and are raising concerns over global trade uncertainty and business planning.

Federal Reserve officials weighed in on economic policy amid these developments. Chicago Fed President Austan Goolsbee supported last week’s interest-rate cut due to a cooling labour market but warned against aggressive further easing while inflation remains above target. Fed Governor Stephen Miran expressed concern that high rates leave the US economy vulnerable to shocks. Meanwhile, San Francisco Fed President Mary Daly said additional rate cuts may be necessary but emphasised a gradual approach to balance the dual objectives of full employment and price stability.

Data Spotlight
US economy grew faster than previously estimated in April-June, boosted by strong consumer spending and business investment, though growth momentum shows signs of slowing as tariffs and policy uncertainty begin to weigh. Second-quarter GDP rose at an annualized rate of 3.8%, up from the initial 3.3% estimate, aided by a contraction in the trade deficit as imports slowed. Initial jobless claims fell 14,000 to 218,000 for the week ended September 20, indicating continued resilience in the labour market. Meanwhile, existing home sales eased 0.2% in August to a seasonally adjusted annualized rate of 4.00 million, slightly above expectations, with inventories falling 1.3% to 1.53 million units, representing 4.6 months of supply.

Takeaway: Despite a strong GDP revision and low jobless claims, slowing housing activity and trade headwinds suggest the US economy may face moderation in growth, creating a delicate balance for the Federal Reserve’s upcoming rate decisions.

WHAT HAPPENED OVERNIGHT

• US Stocks slip as strong economic data raises Fed rate-cut uncertainty
  • All sectors except energy closed lower.
  • Tech stocks led declines: Oracle -5%, Tesla -4%; CarMax plunged 20%, Intel gained 9% on Apple investment talks.
    
    
• US Treasury yields rise as strong economic data reduces Fed cut urgency
  • Yield on the 10-year US Treasury note rose 2.5 basis points to 4.172%.
  • Upwardly revised US Q2 GDP of 3.8%, strong durable goods orders, and falling unemployment claims supported higher yields and tempered expectations for further Fed rate cuts.
    
    

• US Dollar index strengthens on strong US GDP, hits two-week high
  • The US dollar index rose 0.68% to 98.50, marking a two-week high.
  • Upwardly revised US Q2 GDP of 3.8% boosted the greenback and tempered expectations for future Fed rate cuts.
    
    

• Crude oil prices steady amid Russian export curbs
  • Brent crude oil prices steadied after hitting a seven-week high following Russia’s move to restrict fuel exports until year-end.
  • New US economic data tempered optimism over further Federal Reserve rate cuts.
    
      

Day’s Ledger

Economic Data

• ECB Consumer Inflation Expectation
• Fed Balance Sheet
• India Bank Loan-Deposit Growth
• India Foreign Exchange Reserves
• India Oct-Mar Borrowing Plan

 

Corporate Actions

Ace Software to consider right issue

• Glenmark Pharmaceuticals to consider dividend.
• Sobhagya Merchantile to consider fund raising
• United Van to consider stock split

 

Policy Events

• Fed Daly Speech
• ECB President Lagarde Speech
• Fed Hammack Speech
• Fed Barkin Speech
• Fed Bowman Speech

 Tickers to Watch

• ABB INDIA to invest over ₹1.40 billion to expand low-voltage motors manufacturing capacity
  
• DIPAM rejects BHEL’s proposal to set up joint venture with REC subsidiary
  
• INDIAN HOTELS unit gets municipal clearance for Taj Bandstand hotel in Bandra
  
• JSW ENERGY files appeal in Supreme Court against Electricity Tribunal’s order
  
• KALPATARU Projects unit Vindhyachal Expressway settles dispute in road project
  
• Ltimindtree launches AI governance framework BlueVerse RightAction
  
• NATCO PHARMA board gives in-principle approval to explore demerger of agrochemicals business
• NTPC commissions 167 MW out of 245 MW at plot-1 Nokh Solar project
  
• RITES wins $18 million order from South Africa’s Talis Logistics
  
• TVS MOTOR to acquire Italian firm to build innovation hub for global markets
• Lenders ask VEDANTA, ADANI to revise JAIPRAKASH bids, detail funding plans

 

Must Read

• Citigroup shifts 1,000 tech jobs to India amid China cuts, H-1B fee hike
• BP sees global oil demand peaking at 103 million barrels per day by 2030
• Diversified Credit Flows Strengthen Economy, But Demand a Broader RBI Lens
• US economy shows surprising 3.8% growth rate after major revision of Q2 GDP
• Indian equities may see turnaround as downgrades ease: Motilal Oswal
• India's resilience stands out amid global uncertainty, says FM Sitharaman
• Canada Watchdog Projects Wider Deficits in Near Term Amid Tariff-Fueled Struggles
• HSBC Says Quantum Computing Trial Beat Wall Street Rivals
• Fed’s Miran Says Economic Vulnerability Calls for Rapid Cuts

 

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

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