The Japan Times - Stock markets dip as US inflation puts focus on Trump's tariffs

In New York, the Nasdaq traded higher, propelled by buoyant news from tech darling Nvidia. But the blue-chip Dow and broader S&P 500 both struggled.

The dollar gained ground as prospects of a US interest rate cut dimmed, while oil prices slipped.

The US consumer price index for June showed inflation rose 2.7 percent compared with a year earlier.

Though in line with economists' forecasts, the rate was above the Federal Reserve's two-percent target.

Jochen Stanzl, an analyst at CMC Markets, said detail in the CPI report "points to a trend toward stagflation -- an unwelcome topic for investors in an increasingly overvalued market".

Stephen Innes, managing partner at SPI Asset Management, said that "the CPI release showed some early signs of tariff pass-through but underlying inflation remains muted".

Analysts said US inflation could pick up further in coming months, as businesses exhaust pre-tariff stockpiles and pass on their higher import costs to consumers.

"Rising prices will make it harder for the Federal Reserve to cut interest rates and tougher for families living paycheck to paycheck," said Heather Long, chief economist at the Navy Federal Credit Union.

Since April, the United States has imposed a baseline 10-percent tariff on goods imported from main trading partners, with steeper levies on steel, aluminium and cars.

Trump has threatened 30-percent tariffs on European Union and Mexican goods from August 1 if they do not cut trade deals with Washington.

- Tariff threat to Russia -

Most Asian indices closed higher before the US inflation report came out, except for those in Shanghai and Mumbai.

China and India are both big trading partners of Russia -- which Trump said would be hit with tariffs of up to 100 percent within 50 days if President Vladimir Putin did not end his war on Ukraine.

China, which has negotiated a US tariff truce, had on Tuesday issued economic growth data that met expectations, largely thanks to an April-June export surge to get ahead of Trump's levies.

Even though Russia is a major crude producer, oil traders bid prices lower, not higher, following Trump's announcement.

"The fact that oil prices fell suggests investors are relieved that Trump has allowed sufficiently enough time for Putin to agree to a ceasefire," said Fawad Razaqzada, analyst at Forex.com.

"They are also getting used to Trump threating tariffs, only to change his mind in the last minute and extend deadlines," he said.

OPEC said in its latest monthly market report it was holding firm on its production forecasts for oil demand to rise by 1.3 million barrels in 2025 and again in 2026.

"Continued robust global economic growth is expected... despite ongoing US-centred trade challenges and geopolitical uncertainties," it said.

In corporate news, US banks JPMorgan Chase, Wells Fargo and Citi posted strong second-quarter results.

And Nvidia's share price jumped after it said US export restrictions will be eased to allow it to sell its H20 artificial intelligence chips to China.

- Key figures at around 1545 GMT -

New York - Dow: DOWN 0.6 percent at 44,190.75 points

New York - S&P 500: FLAT at 6,267.11

New York - Nasdaq Composite: UP 0.6 percent at 20,771.85

London - FTSE 100: DOWN 0.7 percent at 8,938.32 (close)

Paris - CAC 40: DOWN 0.5 percent at 7,766.21 (close)

Frankfurt - DAX: DOWN 0.4 percent at 24,060.29 (close)

Tokyo - Nikkei 225: UP 0.6 percent at 39,678.02 (close)

Hong Kong - Hang Seng Index: UP 1.6 percent at 24,590.12 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,505.00 (close)

Euro/dollar: DOWN at $1.1615 from $1.1670

Pound/dollar: DOWN at $1.3393 from $1.3428

Dollar/yen: UP at 148.87 yen from 147.77 yen

Euro/pound: DOWN at 86.73 pence from 86.88 pence

Brent North Sea Crude: DOWN 0.4 percent at $68.97 per barrel

West Texas Intermediate: DOWN 0.5 percent at $66.66 per barrel

burs/rmb/rlp

H.Hayashi--JT