US: Stocks mostly fall as Fed avoids dovish shift
The Fed, as expected, held interest rates steady, despite relentless pressure from US President Donald Trump for an interest rate cut. In a press conference, Fed Chairman Jerome Powell emphasised future monetary policy decisions would depend on economic data.
'Powell sounded more hawkish than what markets were hoping for,' said Angelo Kourkafas of Edward Jones.
Futures markets lowered their odds for a September interest rate cut following the press conference and statement, which included no major tweaks that would have implied an imminent interest rate cut.
The Dow Jones Industrial Average finished down 0.4 per cent at 44,461.28.
The broad-based S&P 500 shed 0.1 per cent to 6,362.90, while the tech-rich Nasdaq Composite Index rose 0.2 per cent to 21,129.67.
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Earlier, economic data showed the US economy returned to expansion in the second quarter, notching 3.0 per cent growth after a contraction in the first quarter.
But GDP in both quarters was heavily influenced by import activity in response to Trump's aggressive trade policy.
Powell flagged heightened uncertainty surrounding trade talks.
'It's been a very dynamic time for these trade negotiations,' he told reporters at a press conference. 'We're still a ways away from seeing where things settle down.'
While Trump has announced trade deals in recent days with major partners including Japan and the European Union, other negotiations remain a work in progress ahead of an Aug 1 deadline.
On Wednesday, Trump signed an executive order implementing an additional 40 per cent tariff on Brazilian products, bringing the total trade duties to 50 per cent.
The move is due to what Trump has called Brazil's 'witch hunt' against his far-right ally, former president Jair Bolsonaro, who is accused of attempting a coup in Latin America's biggest economy after losing the 2022 election to Luiz Inacio Lula da Silva.
Markets will get a further reading on the state of the US economy later this week, with reports on inflation on Thursday and on the labor market on Friday.
Investors are also digesting a plethora of earnings reports from big companies.
Late Wednesday, Facebook parent Meta surged in after-hours trading after reporting a 22 per cent jump in revenues to US$47.5 billion, while Microsoft also rallied after its profit soared above expectations in the recently ended quarter, driven by its cloud computing and artificial intelligence units. AFP
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Business Times
12 minutes ago
- Business Times
India aghast at Donald Trump's ‘dead' economy jibe, 25% tariffs
[MUMBAI] Shock, dismay and angst swept across India as businesses, policymakers and citizens digested US President Donald Trump's sharp remarks and a surprise 25 per cent tariff rate earlier this week. While Indian government officials weighed a response and business groups tallied the cost of the trade barrier, the local social media flared up with users protesting Trump's comments and criticising Indian Prime Minister Narendra Modi for not speaking up. It started with Trump saying that India's trade barriers were the 'most strenuous and obnoxious', in a Truth Social post on Jul 30. He added the US may also impose a penalty for New Delhi's purchase of Russian weapons and energy. Less than a day later, he ripped into India again for aligning with Russia, calling them 'dead economies' in another post. With no imminent trade deal, the 25 per cent tariffs kicked in as at Friday. India is hardly alone in facing Trump's trade wrath, and not the subject to the very highest rates, but the news left business and political leaders wondering how to cope with the fallout. 'Blunt-force' message 'Overnight, the US-India trade equation shifted from tense to turbulent,' said Akshat Garg, assistant vice-president at Choice Wealth, a Mumbai-based financial services firm. The levies 'feel less like structured policy and more like a blunt-force political message'. Complicating the narrative around the India trade deal, or the lack of it, was the US pact with its traditional rival Pakistan that came through on the same day. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up As the US released rates across the world on Aug 1, India's relative disadvantage to competitor exporting countries became more apparent, dampening moods and stoking tempers further. 'The biggest blow is that Pakistan and Bangladesh got a better rate than us,' V Elangovan, managing director at SNQS Internationals, an apparel maker in the southern Indian manufacturing hub of Tirupur, told Bloomberg News. 'We were expecting something in the 15 to 20 per cent range.' India's annoyance can be traced back in part to Trump declaring himself the peacemaker that helped broker a ceasefire in the armed conflict between India and Pakistan in May. The move was seen as an effort to upstage Modi and put the two South Asian neighbours on an equal footing, despite India's larger military and economy. The events of this week have cemented that impression further in the eyes of some Indian observers. When the tariff rate news first dropped in late Wednesday evening in India, Ashish Kanodia recalls being 'very disturbed'. A director at Kanodia Global, a closely held exporter that gets over 40 per cent of its revenue from the US selling home fabrics to toys, the entrepreneur already has two of its largest US customers seeking discounts to make up for the levy. 'The next six months are going to be difficult for everyone,' Kanodia said, adding that profit margins will be squeezed. If the pain continues for 'months and months', he said that he will have to start cutting his workforce. The US is India's largest trading partner, with the two-way trade between them at an estimated US$129.2 billion in 2024. Compared with India's 25 per cent, Bangladesh was subjected to a 20 per cent tariff, Vietnam got a 20 per cent levy and Indonesia and Pakistan each received 19 per cent duties. 'We know that we have got a deal that is worse than other countries,' said Sabyasachi Ray, executive director at The Gem and Jewellery Export Promotion Council. 'We will take it up with the government.' Trump's actions mark a 180-degree turn for New Delhi's hopes of preferential treatment over regional peers. It was among the first to engage Washington in trade talks in February, confident of hammering out a deal sooner than others. Trump had called India's Prime Minister Narendra Modi 'my friend' in a Feb 14 post on X and the bond between the two countries 'special'. India is now weighing options to placate the White House, including boosting US imports, Bloomberg News reported, citing sources familiar with the matter, and many hope that the bilateral relationship and the tariff rate can still be improved. 'It is a storm in the India-US relationship at this moment, but I think there's a good chance that it will go away,' Vivek Mishra, deputy director of the Strategic Studies Programme at Delhi-based Observer Researcher Foundation, told Bloomberg News. Indian business and trade groups are supporting the government's stance on the deal as the negotiations for a US-India trade deal continue. Negotiating tactic Jewellery businesses 'are worried but they are not panicking' because they hope a more favourable deal can be worked out, said Ray of the gems export body. 'The negotiation that should be happening should be a win-win, not a win-lose.' The abrupt announcement by Trump over social media when negotiations with India were ongoing 'seems like a knee-jerk reaction', according to Rohit Kumar, founding partner at public policy research firm The Quantum Hub. 'This appears to be a negotiating tactic aimed at unresolved discussion points,' Kumar said. BLOOMBERG
Straits Times
12 minutes ago
- Straits Times
Sheng Siong to open first store in Orchard by end August
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Straits Times
2 hours ago
- Straits Times
India reels from the shock of Trump's onslaught
NEW DELHI – President Donald Trump's new list of tariffs on half the world's countries sent the United States' trading partners scrambling to understand how their businesses will be affected. India got the bad news a day earlier – its goods face a tariff of 25 per cent or more – but the extra time was hardly enough to adjust to the fresh chaos. Indian negotiators had not expected to conclude a meaningful deal in time to meet Mr Trump's revised deadline of Aug 1. But they did expect to be treated as well as their neighbours, and to keep haggling with US officials until October or November, when Mr Trump was invited to visit India as part of the Quad defense group, which brings together four big democracies – India, the United States, Japan and Australia – with a shared interest in standing up to China. Instead, they were fed a heap of insults and injuries. Along with the 25 per cent rate, one of the highest in Asia and only a point lower than what was threatened on 'Liberation Day' in April, India was informed that its existing trade barriers are 'strenuous and obnoxious'; it will be charged an untold penalty for buying Russian oil; it is a 'dead economy.' It's archrival Pakistan was praised and promised an oil exploration deal. Hurt feelings aside, the results are confusing. Two of the biggest categories of exports to the United States from India are personal electronics, worth about US$14 billion a year, and pharmaceuticals, worth US$10 billion. Mr Rajesh Sharma, executive director of India Cellular and Electronics Association, said smartphones were exempted from these tariffs; so did executives at pharmaceutical companies. But on Aug 1, after reading the executive order, the Global Trade Research Initiative in New Delhi concluded the opposite. India's stock markets dipped on the news for two days running. Indian and international banks wrote notices warning that the country's generally hard-charging economic growth is likely to slow measurably as a result of the tariffs. Then there are the unknown tariffs. On July 6, Mr Trump wrote that countries aligned with the Brics group, of which India is a founding member, would incur an additional 10 per cent penalty. Then on July 14, he said that, if Russia didn't make peace with Ukraine within 50 days, he would punish its trading partners with 'secondary tariffs' of 100 per cent. That figure is making Indians worry anew. Mr Trump added 'plus a penalty' to the 25 per cent rate imposed on India, for buying Russian oil and weapons. Ms Shashi Tharoor, a prominent member of the opposition, spoke to an Indian news agency about the possible impact. 'There's even talk of a 100 per cent penalty,' he said, 'which will destroy our trade with America.' There is evidence that Indian buyers of Russian oil were already pulling back before the executive order. 'Indian refiners have reduced Russian crude purchases this week,' said Ms Sumit Ritolia, an analyst at Kpler, which tracks shipping and commodities. They were already 'looking to further diversify, amid rising concerns over potential US sanctions,' having spent years taking advantage of discounted Russian oil to reduce their imports from the Persian Gulf. Reducing the United States' trade deficit is one of the Trump administration's goals, so persuading India to buy more American oil and gas would make sense. Last year, India exported US$45.7 billion more goods to the United States than it imported. It spent about three times as much importing oil. If a third of that were redirected to American sources, their bilateral trade would be evened out. Mr Trump's angry barrage of social media has complicated further negotiations. The breakdown of trust between Mr Narendra Modi, India's prime minister, whom Mr Trump called his 'true friend,' the US president is likely to make it harder to complete any deal, analysts say. Indian news outlets have reported that Mr Trump wanted to iron out some outstanding issues, after four rounds of direct talks between the two sides, in a phone call with Mr Modi. The Indian government was anxious to avoid any of his last-minute surprises. The US commerce secretary accused India of 'slow-rolling' its trade negotiations. Indian officials and analysts say the friction is caused by a fundamental difference of approach. Mr Trump has a penchant for quick, top-down dealmaking. India's bureaucracy moves at a methodical pace, especially when it comes to opening up the agriculture market, which is politically sensitive. India's recently concluded trade deal with Britain took three years of talks, under two British prime ministers. On Aug 1, India's Foreign Ministry released a statement that put on a brave face. 'India and the United States share a Comprehensive Global Strategic Partnership,' established in 2013 between President Barack Obama and then-Prime Minister Manmohan Singh, 'anchored in shared interests, democratic values and robust people-to-people ties.' The ministry stuck to principles, revealing no plan for breaking through Mr Trump's hard line. 'This partnership has weathered several transitions and challenges,' the statement said. 'We remain focused on the substantive agenda that our two countries have committed to and are confident that the relationship will continue to move forward.' NYTIMES
