Trump Urges EU Tariffs on China, India; Gold Hits Record Amid Rate-Cut Bets

GLOBAL MOOD: Cautiously Risk-on
Drivers: Trade tensions, Middle East conflicts, Fed Rate-cut expectations

Investors are growing increasingly cautious amid rising geopolitical tensions, particularly with the prospect of US led tariffs on China and India to pressure Russia, which is fueling uncertainty in global trade flows. Investors are also closely monitoring economic indicators and upcoming inflation data, as expectations of a US interest rate cut are driving movements in gold and other safe-haven assets. Overall, investors are balancing optimism from market rallies with concerns over slowing growth, policy risks, and potential disruptions in energy and commodity markets.

TODAY’S WATCHLIST
 - US Aug PPI
 - ECB Buch Speech

THE BIG STORY
US President Donald Trump urged EU officials on Tuesday to impose tariffs of up to 100% on China and similarly expansive tariffs on India, aiming to pressure Russian President Vladimir Putin amid Russia’s ongoing invasion of Ukraine. The request was made via conference call to EU sanctions envoy David O'Sullivan and other officials, as both China and India remain major buyers of Russian oil. Meanwhile, US business confidence in China has plummeted, with only 41% of firms optimistic about their five-year China outlook, the lowest level since the American Chamber of Commerce in Shanghai began tracking it in 1999. 

Also, gold continued its record rally, rising to $3,643.57 per ounce, driven by expectations of an imminent US interest rate cut and anticipation of upcoming inflation data.

Data Spotlight 
The US economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated, according to the government, suggesting that job growth was already stalling before President Donald Trump's aggressive tariffs on imports. The preliminary annual benchmark revision from the Labor Department’s Bureau of Labor Statistics indicates that nonfarm payroll gains averaged about 71,000 per month, instead of the previously reported 147,000. Economists had expected the revision to fall between 400,000 and 1 million fewer jobs. This follows news last Friday that job growth nearly stalled in August and the economy shed jobs in June for the first time in four and a half years.

Takeaway: US job growth was significantly weaker than previously reported, highlighting that the labour market was already slowing before the impact of tariffs, reinforcing expectations for Federal Reserve rate cuts.

WHAT HAPPENED OVERNIGHT

• US stocks hit record highs on rate-cut optimism 
  
  • Downward payrolls revisions reinforced bets that the Federal Reserve will cut interest rates soon.
  • UnitedHealth shares jumped on optimistic Medicare enrollment projections.
  • JPMorgan posted gains after strong third-quarter revenue guidance in investment banking and markets.
    
    

• US treasury yield rise on cooling bond demand and weak jobs data
  
  • US treasury 10-year yields rose to 4.082% as long-end bond buying eased.
  • Weak jobs data reinforced expectations for multiple Fed rate cuts this year.
  • 2-year note yield increased to 3.55%, tracking short-term rate expectations.
    
    
• US dollar firms ahead of key inflation data
  
  • The US dollar index rose 0.43% to 97.81, while the euro fell 0.49% to $1.1704.
  • The dollar briefly fell after downward revisions of nearly one million jobs for April 2024–March 2025.
  • Investors consolidated positions ahead of key inflation reports.
    
    
• Crude oil prices rise on middle east tensions
  
  • Brent crude oil extended gains after Israeli attack on Hamas leadership in Doha.
  • Brent crude ended at $66.39 per barrel, up 0.56%, while US WTI settled at $62.63 a barrel, up 0.59%.

Day’s Ledger

Economic Data

• China Aug Inflation Rate
• China Aug PPI
• US Aug PPI

Corporate Actions

• Checkpoint Trends to consider fund raising
• Keystone Realtors to consider fund raising
• Shradha Infraprojects to consider fund raising
• Wardwizard Innovations to consider rights issue

Policy Events

• ECB Buch Speech

TICKERS TO WATCH

• BAJAJ AUTO to cut two-wheeler prices by up to ₹20,000 after GST rate reduction
• GLENMARK PHARMA arm receives $700 million from AbbVie under cancer drug deal
• HONDA CARS INDIA to fully pass GST relief benefits to customers
• JIO FINANCIAL executes joint venture agreement with Allianz
• M&M’s August production rises nearly 9% YoY to 86,890 units
• OLA ELECTRIC says inventory verification note has no financial impact
• STERLING AND WILSON RENEWABLE ENERGY secures LoI from leading IPP for ₹4.15 billion
• TATA POWER launches large EV charging hub in Mumbai
• US FDA issues ‘official action indicated’ status for SUN PHARMA’s Halol unit
• VODAFONE IDEA approaches Supreme Court over fresh govt AGR demands

MUST READ:

• Cash Cows, Not Tech Leaders
• GST Exemptions, Nil Rates and Other Smoke and Mirrors
• India’s Double Policy Act Faces Test of Transition and Transmission
• Europe’s Carbon Border Tax will Test the Steel of India’s Green Resolve
• Citi sees $10-12 billion IPO pipeline in 3 quarters, says Amol Gupte
• Suzuki says production of flex fuel vehicles in India to commence in FY26
• PSBs must marry innovation with trust, says SBI chairman CS Setty
• E-way bill tally hit 129 million in August, second only to July record
• US payroll data marked down a record 911,000 in preliminary estimate
• GST reforms to boost consumption but limit fiscal consolidation: Moody's
• Russia Data Show Crude Output Was Below OPEC+ Target in August

---

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Nepal is burning. 

Gen Z has taken to the streets in a spontaneous revolt against corruption and unemployment, torching symbols of state power and forcing Prime Minister K.P. Oli to resign.

Saibal Dasgupta's writes how this movement, eerily echoing Bangladesh 2024, risks sliding into vandalism and a leadership vacuum that could keep New Delhi busy for months.