Expect significant new tariffs on Chinese imports and moderate levies on goods from other nations , as President-elect Donald Trump rolls out his protectionist agenda. However, with his preference for chaotic policymaking and sudden shifts , there’s uncertainty on how soon these import taxes will actually hit. Dubbed “ Tariff Man ,” Trump aims to use tariffs both strategically and tactically . He’s mentioned taxing all Chinese goods up to 60% and potentially setting 10%-20% tariffs on imports globally , but details on these plans remain vague . Key players within Trump’s team are divided: Robert Lighthizer , a staunch tariff advocate, sees permanent duties as crucial to balance US trade , while others, like billionaires John Paulson and Scott Bessent , view tariffs as temporary leverage. Trump’s previous administration had mixed feelings, especially on national security-related trade limits , which he sometimes dismissed, favoring an “open for business” approach. High-profile busin
Major share markets in Asia showed caution, while the U.S. dollar and bond yields weakened ahead of anticipated inflation data, which investors hope will clear the path for interest rate cuts in both the U.S. and Europe. Meanwhile, oil prices climbed, driven by renewed tensions in the Middle East.
Key Developments:
Oil Prices Increase: Oil prices rose by 0.7%, with Brent crude reaching $79.52 per barrel and U.S. crude at $75.33 per barrel. This surge was prompted by escalating tensions between Israel and Hezbollah, which have raised concerns about potential supply disruptions if the conflict intensifies.
Asian Market Performance:
- MSCI Asia-Pacific Index: The MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6%, building on last week's 1.1% rise.
- Japan's Nikkei: The Nikkei fell by 0.8%, pressured by a stronger yen, which negatively impacted exporter stocks.
- Chinese Blue Chips and South Korea: Chinese blue chips declined by 0.4%, while South Korea's market dropped by 0.2%.
Currency Movements:
- Yen Strength: The Japanese yen strengthened against the dollar, which slipped by 0.2% to ¥144.14 after falling 1.3% on Friday. This movement followed Federal Reserve Chair Jerome Powell’s comments signaling an imminent start to easing monetary policy.
- Euro and Swiss Franc: The euro edged up to $1.1187, near a 13-month high, while the Swiss franc remained firm at 0.8474 per dollar.
Federal Reserve and Interest Rates: Powell’s remarks have increased expectations of a soft landing for the U.S. economy, with markets now fully pricing in a quarter-point rate cut at the Fed’s September 18 meeting. There is also a 38% chance of a larger 50 basis point cut, depending on upcoming data, particularly the U.S. jobs report due on September 6.
Gold Prices: Supported by a weaker dollar and lower bond yields, gold prices remained strong at $2,514 per ounce, close to an all-time peak of $2,531.60.
Upcoming Earnings and Data:
- Nvidia Earnings: Investors are eagerly awaiting Nvidia’s earnings report on Wednesday, with high expectations for the AI-focused company. The stock’s performance could significantly impact the broader market, particularly given its substantial contribution to the S&P 500’s gains this year.
- Inflation Data: U.S. personal consumption and core inflation data, as well as a flash reading on European Union inflation, are due on Friday. These figures are crucial for determining the likelihood and size of rate cuts in the coming months.
Overall, markets are in a cautious wait-and-see mode, balancing between geopolitical risks, economic data, and central bank policies. The outcomes of these factors will be pivotal in shaping market trends in the near term.
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