London (AFP) – Stocks climbed Friday as investors digested a new tariff blitz by US President Donald Trump and data showing a key US inflation metric rose in line with expectations. Wall Street pushed higher after slumping for three straight sessions over concerns that the US Federal Reserve might reconsider more interest-rate cuts, although the tech-heavy Nasdaq wobbled in late morning trading.
Official data showed that the Fed’s preferred gauge of inflation, the personal consumption expenditures (PCE) price index, reached 2.7 percent in August, up from 2.6 percent in July. The figure is above the central bank’s two-percent inflation target. But it was in line with analyst forecasts, giving investors “some relief that the Fed will remain on track to cut rates two more times this year,” said Bret Kenwell, US investment analyst at eToro trading platform.
The Fed must weigh between fighting inflation and propping up a weakening US jobs market, Kenwell said. “The Fed’s two percent inflation target seems to be a low priority right now,” he said. Instead, he added, it is “trying to restore balance between the weakening labour market and rising inflation, hoping to find a happy medium on both sides of its dual mandate.”
Official data Thursday showing faster-than-expected US economic growth in the second quarter had slightly dampened expectations of a Fed cut next month, which would follow on from its September reduction, the first this year. Investors were also digesting Trump’s latest tariff moves. The US president announced Thursday steep new tariffs on pharmaceutical products, big-rig trucks, home renovation fixtures, and furniture. He said a 100-percent tariff would be imposed on “any branded or patented” pharmaceutical product from October 1, unless a company is building a manufacturing plant in the United States.
In reaction, share prices of Asian pharma firms largely fared worse compared with Western peers who have announced plans to invest. Shanghai Fosun shed around six percent, and South Korea’s Daewoong was off more than three percent. Japan’s Daiichi Sankyo and Astellas Pharma were also well in the red. Sydney-listed CSL shed nearly two percent, while Sun Pharmaceutical Industries was a major loser in India. Key industry player India “could be spared” from the levies for now, however, according to MUFG bank analyst Michael Wan. “It is still unclear how branded or patented pharmaceutical products will be defined, but our working assumption is that this will not incorporate generic drugs and pharmaceuticals shipped by the likes of India to the US,” he wrote in a client note.
Share prices of British pharma giants GSK and AstraZeneca climbed, with both companies having recently announced major investment plans in the United States. US rivals Pfizer and Merck and France’s Sanofi also closed higher. The European Union was quick to point out that its trade deal with Trump had capped tariffs on EU pharmaceutical goods at 15 percent.
Oil prices rose, with Brent briefly climbing above $70 per barrel for the first time since August, as tensions mount between NATO countries and Russia, boosting the chances of further sanctions being adopted on Russian energy exports.
– Key figures at around 1530 GMT –
New York – Dow: UP 0.5 percent at 46,182.01 points
New York – S&P 500: UP 0.3 percent at 6,625.04
New York – Nasdaq Composite: FLAT at 22,388.91
London – FTSE 100: UP 0.8 percent at 9,284.83 (close)
Paris – CAC 40: UP 1.0 percent at 7,870.68 (close)
Frankfurt – DAX: UP 0.9 percent at 23,739.47 (close)
Tokyo – Nikkei 225: DOWN 0.9 percent at 45,354.99 (close)
Hong Kong – Hang Seng Index: DOWN 1.4 percent at 26,128.20 (close)
Shanghai – Composite: DOWN 0.7 percent at 3,828.11 (close)
Euro/dollar: UP at $1.1700 from $1.1658 on Thursday
Pound/dollar: UP at $1.3411 from $1.3335
Dollar/yen: DOWN at 149.44 yen from 149.81 yen
Euro/pound: DOWN at 87.24 pence from 87.42 pence
Brent North Sea Crude: UP 1.6 percent at $69.67 per barrel
West Texas Intermediate: UP 1.9 percent at $66.22 per barrel
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© 2024 AFP
