Global Markets Mixed as US Inflation Rises on Trump Tariffs, Dimming Rate Cut Hopes

European and Asian markets were mixed on Wednesday following a hotter-than-expected US inflation report.

US inflation rose to 2.7% in June, up from 2.4% in May, driven by rising prices for imported goods like clothing and toys—indicating the impact of newly imposed tariffs.

“So far we have yet to see a decisive and meaningful pass-through from tariffs into the inflation readings,” said Vas Gkionakis, senior economist and strategist at Aviva Investors. “It is likely to come, but we’ll just have to wait and see the timing and the extent.”

While most US stocks fell, Nvidia’s gains lifted the Nasdaq to a new record, defying broader downward pressure.

Economists say the rise in prices suggests that President Trump’s tariffs on foreign goods are starting to fuel consumer inflation. Trump has warned that more tariffs are coming, including a potential 30% levy on goods from the EU and Mexico by August 1. US officials and the Federal Reserve are closely watching these developments, as tariffs may delay interest rate cuts.

Market Summary

Europe:

·        Germany’s DAX: +0.1%

·        France’s CAC 40: -0.1%

·        UK’s FTSE 100: +0.1%

Asia:

·        Japan’s Nikkei 225: -0.1%

·        Hong Kong’s Hang Seng: -0.3%

·        Shanghai Composite: -0.1%

·        South Korea’s Kospi: -0.9%

·        Australia’s ASX 200: -0.8%

·        Taiwan’s Taiex: +0.9%

·        India’s Sensex: +0.2%

·        Thailand’s SET: -0.3%

·        Indonesia’s JCI: +0.7%, boosted by a new US tariff deal and an interest rate cut by its central bank.

As Indonesian President Prabowo Subianto told reporters:.

“We have calculated everything and discussed everything. The most important thing for me is my people, as I must protect the interests of our workers… This is our offer, and we are not able to give more (to the US).”

Wall Street Snapshot

·        S&P 500: -0.4%, still near record highs

·        Dow Jones: -1%

·        Nasdaq: +0.2%, led by Nvidia’s 4% surge after news it would resume AI chip sales to China

·        Futures for the S&P 500 and Dow were flat ahead of Wednesday’s session.

Fed Chair Jerome Powell has said the Fed is monitoring the inflation impact of tariffs and remains cautious on cutting rates. Traders now expect the first Fed rate cut could come in September, but recent data could delay that timeline. Some fear Trump’s pressure on the Fed could undermine central bank independence.

Oil prices slipped, despite strong Chinese demand, on concerns over global economic fallout from trade tensions, with Brent crude valued at $68.40 and US crude at $66.31.

Gold rose 0.5% to $3,338.75 an ounce. The dollar is slightly down vs. the yen and euro, and the dollar index remains steady at multi-week highs.

Reuters and the Associated Press contributed to this report.