Markets tumble as Fed stays steady and Trump lifts new tariffs

Trump Announces 15% Tariff on South Korean Goods

Asian markets largely declined Thursday, while the dollar maintained most of its gains as traders weighed a cautious Federal Reserve with strong tech earnings and President Donald Trump’s tariffs on key economies South Korea and India.

Federal Reserve Holds Rates Steady

• The central bank kept interest rates unchanged and indicated it would not cut any sooner, despite pressure from the U.S. president.
• Two Fed board members voted to cut rates, but investors lowered expectations for a September reduction, driving the dollar higher against peers.
• The bank cited a moderation in economic activity in the first half and “solid” labor market conditions, warning that “uncertainty about the economic outlook remains elevated” and inflation stays somewhat high.

Fed Chairman Comments on Trade Negotiations

Fed boss Jerome Powell told reporters, “It’s been a very dynamic time for these trade negotiations,” adding that “we’re still a ways away from seeing where things settle down.”

JP Morgan’s Analyst Notes Inflation Risk

Kerry Craig of JP Morgan Asset Management said, “With some details on baseline tariffs only just becoming clear, and many of the details of the recently agreed ‘deals’ still to be ironed out, the risk is that inflation rates will continue to rise in the coming months.”

Key Tariff Deals and Commitments

• Trump announced a 15% tariff on South Korean goods and secured a $350 billion investment commitment from Seoul.
• India faces a 25% tariff, coupled with an unspecified penalty over New Delhi’s purchases of Russian weapons and energy.
• Trump added a 40% tax on Brazilian products, criticizing Brazil’s “witch hunt” against former president Jair Bolsonaro on coup charges.

Asian Markets React Amid Tech Earnings

• Hong Kong, Shanghai, Sydney, Singapore, Seoul, Manila, Wellington and Bangkok all fell, though Tokyo, Taipei and Jakarta edged up.
• The yen moved little after the Bank of Japan decided against hiking rates, while cautious about the country’s trade deal with the United States.
• Tech giants Microsoft and Meta posted better-than-expected earnings, sending their stocks soaring in after‑market trade.
• Amazon and Apple are set to release results later Thursday.

Market Snapshot at 02:30 GMT

• Tokyo – Nikkei 225: UP 0.9 % at 41,020.91
• Hong Kong – Hang Seng Index: DOWN 1.2 % at 24,871.40
• Shanghai – Composite: DOWN 0.7 % at 3,591.17
• Euro/dollar: UP at $1.427 from $1.1409 on Wednesday
• Pound/dollar: UP at 1.3260 from 1.3239
• Dollar/yen: DOWN at 148.81 yen from 149.50 yen
• Euro/pound: UP at 86.18 pence from 86.15 pence
• West Texas Intermediate: FLAT at $70.00 per barrel
• Brent North Sea Crude: DOWN 0.2 % at $73.10
• New York – Dow: DOWN 0.5 % at 44,632.99
• London – FTSE 100: UP 0.6 % at 9,136.32