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Perth Now
3 minutes ago
- Perth Now
Asia shares fall as US unleashes fresh tariffs
Asian shares fell on Friday after the US slapped dozens of trading partners with steep tariffs, while investors anxiously await US jobs data that could make or break the case for a Fed rate cut next month. Late on Thursday, President Donald Trump signed an executive order imposing tariffs ranging from 10 per cent to 41 per cent on US imports from dozens of countries and foreign locations. Rates were set at 25 per cent for India's US-bound exports, 20 per cent for Taiwan's, 19 per cent for Thailand's and 15 per cent for South Korea's. He also increased duties on Canadian goods to 35 per cent from 25 per cent for all products not covered by the US-Mexico-Canada trade agreement, but gave Mexico a 90-day reprieve from higher tariffs to negotiate a broader trade deal. "At this point, the reaction in markets has been modest, and I think part of the reason for that is the recent trade deals with the EU, Japan, and South Korea have certainly helped to cushion the impact," said Tony Sycamore, analyst at IG. "After being obviously caught on the wrong foot in April, the market now, I think, has probably taken the view that these trade tariff levels can be renegotiated, can be walked lower over the course of time." MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 per cent, bringing the total loss this week to 1.5 per cent. South Korea's KOSPI tumbled 1.6 per cent while Japan's Nikkei dropped 0.6 per cent. EUROSTOXX 50 futures dropped 0.5 per cent. Nasdaq futures fell 0.5 per cent while S&P 500 futures slipped 0.3 per cent after earnings from Amazon failed to live up to lofty expectations, sending its shares tumbling 6.6 per cent after hours. Apple, meanwhile, forecast revenue well above Wall Street's estimates, following strong June-quarter results supported by customers buying iPhones early to avoid tariffs. Its shares were up 2.4 per cent after hours. Overnight, Wall Street failed to hold onto an earlier rally. Data showed inflation picked up in June, with new tariffs pushing prices higher and stoking expectations that price pressures could intensify, while weekly initial jobless claims signalled the labour market remained on a stable footing. Fed funds futures imply just a 39 per cent chance of a rate cut in September, compared with 65 per cent before the Federal Reserve held rates steady on Wednesday, according to the CME's FedWatch. Much now will depend on the US jobs data due later in the day and any upside surprise could lower the chance for a cut next month. Forecasts are centred on a rise of 110,000 in July, while the jobless rate likely ticked up to 4.2 per cent from 4.1 per cent. The greenback has found support from fading prospects of imminent US rate cuts, with the dollar index up 2.4 per cent this week against its peers to 100, the highest level in two months. That is its biggest weekly rise since late 2022. The Canadian dollar was little impacted by the tariff news, having already fallen about 1.0 per cent this week to a 10-week low. The yen was the biggest loser overnight, with the dollar up 0.8 per cent to 150.7 yen, the highest since late March. The Bank of Japan held interest rates steady on Thursday and revised up its near-term inflation expectation but Governor Kazuo Ueda sounded a little dovish. Treasuries were largely steady on Friday. Benchmark 10-year US Treasury yields ticked up one basis point to 4.374 per cent, after slipping two bps overnight. In commodity markets, oil prices were steady after falling 1.0 per cent overnight. US crude rose 0.1 per cent to $US69.36 ($A107.89) per barrel, while Brent was at $US71.84 ($A111.75) per barrel, up 0.2 per cent. Spot gold prices were steady at $US3,288 ($A5,115) an ounce.
The Age
29 minutes ago
- The Age
Trump takes aim at ‘foreign freeloading nations' over drug prices in new threat to PBS
Washington: US President Donald Trump has blamed 'foreign freeloading nations' for the high drug prices faced by Americans and told pharmaceutical firms to negotiate harder with other countries, in a new threat to programs such as Australia's Pharmaceutical Benefits Scheme. Trump issued letters to the bosses of 17 drug firms on Thursday (Friday AEST) demanding they extend 'most favoured nation' pricing to the US Medicaid scheme, and guarantee such pricing for new drugs. It means other comparable, high-income nations could not be offered cheaper prices than the US. 'Domestic MFN pricing will require you, and all manufacturers, to negotiate harder with foreign freeloading nations,' Trump wrote in the letters. 'US trade policy will endeavour to support this. However, increased revenues abroad must be repatriated to lower drug prices for American patients and taxpayers through an explicit agreement with the United States.' The letters were sent to major drugmakers including Pfizer, Eli Lilly, AstraZeneca and Johnson & Johnson, and published on Trump's social media. They did not mention Australia but referred to putting 'an end to the free ride of American innovation by European and other developed nations'. Under the PBS, Australians can buy life-saving drugs worth thousands of dollars for as little as $31.60 a script after the government negotiates with the drug company to secure a lower price based on buying in bulk. Trump's letter makes explicit instructions to drug firms to 'negotiate harder' and return those extra profits to American patients and taxpayers.
Sydney Morning Herald
33 minutes ago
- Sydney Morning Herald
You can't quit America: It's too big to fail as the global leviathan
This week, the European Union agreed to a trade deal with the United States that amounts to a capitulation to President Donald Trump. Yes, Trump had already made concessions in advance by pre-emptively walking back his outrageous opening gambit in the tariff war when markets rebelled. But the US president has since enjoyed a run of victories, establishing a new baseline for US tariff revenue with minimal retaliation from its trading partners. The deal that European Commission president Ursula von der Leyen sealed with Trump is part of this new normal, in which most countries appear willing to pay extra for access to American markets. It's not America but the rest of the world that seems to be chickening out. There is a hard lesson here for anyone who imagines that a populist-governed US might somehow end up isolated on the world stage. This fantasy has been a source of both comfort and schadenfreude for anti-Trump liberals, since it offers a vision of potential political escape from populism, with liberal culture reconstituted in Toronto or Oxford or Scandinavia, and a vision of a Trumpian America suffering economic punishment as its walls rise higher and the rest of the world prospers through mutual exchange – without the US. Both conceits are fundamental misreadings of the global situation, which the foreign leaders who have bowed to Trump's demands seem to understand clearly. The first thing they understand is that American economic power is just too big to escape or isolate or ignore. Before Trump's 2024 victory, the economic story was one in which American growth was clearly pulling away from our peer economies in Europe and East Asia. Since Trump's return to power, even protectionist policy that almost every economist deplores hasn't prevented the American sharemarket from rising and the American growth machine from churning onwards. Loading Even if Trump reverts to deeper folly and causes a recession, the forces favouring the US over Germany or Britain or South Korea or Japan will still be present in the next administration and beyond. Almost all of America's liberal-democratic peers are poorer than it is and too sclerotic to suddenly surge past it. There is just no booming, youthful, dynamic, entrepreneurial zone capable of taking the place of America in a network of free economies, and therefore no substitute for trade with its companies and access to its markets, even at a Trumpian price. There is, of course, China, which is strong enough to stand up to Trump's bullying and dynamic enough to stand as a counterweight to American economic might. But unless your country is already authoritarian – and not necessarily even then – the risks of throwing yourself fully into China's orbit are still much more extreme than the costs of managing a populist administration in Washington. This doesn't mean other countries won't end up trading more with China because of American protectionism. But there is no plausible world where China simply replaces the US as a trusted partner and pillar of globalisation. Here the economic story links up with the political one. If it's implausible to imagine a network of European and Asian economies prospering without the American leviathan, it's even less plausible to imagine some kind of liberal world order reconstituting itself separately from the US.
