Asian share markets are rallying on Monday as investors celebrate the likely resumption of interest rate cuts in the United States, while hoping AI-superstar Nvidia’s results this week will help justify the sector’s stratospheric valuations in the US.
EMs are seeing strong inflows based on country ETF data. Except for India, which continues to see foreign portfolio outflows, strong domestic flows ensure the market is not correcting sharply, although it has been an underperformer for over 12 months now compared to both EMs and DMs.
Today is a Risk On upswing day based on Powell’s dovish pivot at the Jackson Hole Symposium on Friday.
Chinese stocks and inflows are in contrast to a slowing economy , weighed down by a continuing deleveraging of its property sector and the impact of US tariffs.
India will brace for additional tariffs of 25% that are set to go into effect from August 27th. The total tariffs of 50% plus the existing MFN tariffs that were in place before the present Trump 2.0 tariff surge, make most Indian sectors unviable. The impact on some $ 48 billion of Indian goods exports, with pharma and electronics exempted for now, will flow through as a second order impact in job losses in labour intensive sectors of textiles, gems and jewellery and leather goods.
The GST Council meeting of September 3rd-4th holds out some hope of an indirect tax stimulus to a faltering urban consumption, which is pointing to a slowing though still growing economy.
US futures are soft ahead of a data-heavy week, with the PCE index, the favoured inflation metric of the Fed expected on Friday to show core inflation creeping up to its highest since late 2023 at 2.9%.
US big retailers reported good numbers except for Target, but acknowledged that tariffs are slowly raising prices. Food industry is lobbying hard to get tariffs on vegetables, fruits, and seafood removed, as that inflation is already making an impact on the grocery bills of Americans. The Congressional Budget Office has forecast that tariffs will bring in additional revenue of $ 4 trillion for the US economy over the next 10 years, which will offset the lost revenues from the Big Beautiful tax cuts announced earlier in the year.
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US futures are flat to negative, while Indian stock futures are pointing to a positive open in line with the Asian counterpart, which are strongly up this morning.
