Stocks Climb as Investors Digest Tariff Blitz and Inflation Data

Strategic Insights -

US stocks opened higher on Friday as investors reconciled with a new tariff blitz by President Donald Trump and data showing a key inflation metric rose in line with expectations. The Federal Reserve's preferred gauge of inflation, the personal consumption expenditures price index, reached 2.7 percent in August, up from 2.6 percent in July, but still within analyst forecasts. This gave 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.

Key Takeaways:

  • The personal consumption expenditures price index rose to 2.7 percent in August, up from 2.6 percent in July, but aligned with analyst forecasts.
  • The Fed must balance fighting inflation and propping up a weakening US jobs market, said Bret Kenwell, US investment analyst at eToro trading platform.
  • President Trump's latest tariffs move included a 100-percent tariff on branded or patented pharmaceutical products from October 1, unless a company builds a manufacturing plant in the United States.
  • Key industry player India may be spared from the levies for now, according to MUFG bank analyst Michael Wan.
  • Big-pharma companies with significant US investment plans, such as GSK and AstraZeneca, saw their shares rise in London afternoon deals.

Statistics:

  • The personal consumption expenditures price index rose 2.7 percent in August.
  • The inflation figure is above the Fed's two-percent inflation target.
  • The Fed is expected to cut interest rates two more times this year.
  • Shanghai Fosun shed around six percent and South Korea's Daewoong was off more than three percent in reaction to Trump's tariffs move.
  • Western pharma companies saw their share prices rise compared to Asian peers.
  • India could be spared from the levies for now, according to MUFG bank analyst Michael Wan.

Sources:

  • eToro trading platform, Bret Kenwell, US investment analyst
  • MUFG bank, Michael Wan, analyst
  • BLOX Digital Content Exchange