Asian markets opened cautiously on Friday after US President Donald Trump announced a fresh set of tariffs, while investors lowered expectations for significant Federal Reserve interest rate cuts following stronger-than-anticipated economic data.Trump revealed plans to levy a 100% tariff on imported branded pharmaceuticals, 25% on heavy-duty trucks, and 50% on kitchen cabinets. He also said that bathroom vanities would face a 50% duty and upholstered furniture a 30% tariff, all effective from October 1.Japan’s Topix pharmaceutical index (.IPHAM.T) declined 1.4%, while Australian biotech company CSL dropped over 3%. The Nikkei lost 0.5%, and the MSCI Asia-Pacific index outside Japan fell 0.45%.“Right now, this adds to a somewhat fragile environment for risk assets,” said Tony Sycamore, a market analyst at IG, as quoted by Reuters.In the US, futures reflected investor caution, with Nasdaq contracts down 0.08% and S&P 500 futures slipping 0.02%. Meanwhile, European futures posted modest gains, with EUROSTOXX 50 contracts up 0.37% and FTSE futures rising 0.25%.Investor sentiment was further dampened as expectations of aggressive Fed easing were tempered by robust economic indicators. Economists at Wells Fargo noted that recent GDP figures confirm the US economy’s resilience in the first half of the year despite unpredictable trade policy.Traders now anticipate roughly 39 basis points of rate reductions by December, slightly lower than the 40-plus basis points forecast earlier this week. “Markets had built in optimism for four to six cuts, but now it looks like four is the most likely scenario, and even that may be generous,” said Sycamore.While most Fed officials remain cautious on future rate moves, newcomer Stephen Miran has advocated for sharp reductions to avoid a labor market downturn, reported Reuters.
Dollar strengthens, commodities rise
The dollar strengthened in response, hovering near 150 yen. The euro last traded at $1.1668, down 0.6% from the previous session, while sterling remained steady at $1.3344.Commodity prices saw modest gains, with Brent crude rising 0.24% to $69.59 per barrel and US crude climbing 0.43% to $65.26 per barrel. Trump also indicated confidence that Turkey would comply with US requests to reduce Russian oil imports, hinting at the potential lifting of sanctions to allow Ankara to acquire advanced American F-35 jets following talks with President Erdogan.Spot gold inched higher to $3,751.69 an ounce.
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