Global Markets React to U.S. Inflation Rise and Tariff Concerns

Global markets showed mixed performance on Wednesday as investors reacted to new U.S. inflation data and ongoing concerns about rising tariffs. While Wall Street closed mostly lower following the inflation update, gains from tech giant Nvidia helped the Nasdaq reach another record high.

The U.S. Consumer Price Index showed inflation accelerating to 2.7% in June, up from 2.4% in May. Economists attributed the jump to higher prices on imports such as clothing, toys, and other consumer goods—signs that tariffs introduced under President Donald Trump may be fueling price pressures across the economy.

European and Asian Markets Show Cautious Trading

In Europe, the global markets displayed a subdued tone. Germany’s DAX gained 0.1% to 24,074.54, while France’s CAC 40 dipped by 0.1% to 7,755.90. The UK’s FTSE 100 inched up 0.1% to reach 8,950.11. U.S. futures were relatively flat, with S&P 500 futures down less than 0.1% and the Dow futures showing little movement.

 

Asian markets reflected similar uncertainty. Tokyo’s Nikkei 225 edged down slightly to 39,663.40 as traders monitored political developments ahead of Japan’s Upper House elections. Anticipated tax cuts and increased government spending could impact fiscal stability, raising concerns among investors and pushing long-term Japanese bond yields to multi-year highs.

SPI Asset Management’s Stephen Innes commented, “It’s not just about political handouts. The real concern is whether Japan’s fragile fiscal framework can withstand another wave of stimulus.”

Other key Asian indices also saw declines:

• Hong Kong’s Hang Seng dropped 0.3% to 24,517.76
• Shanghai Composite fell marginally to 3,503.78
• South Korea’s Kospi declined 0.9% to 3,186.38
• Australia’s ASX 200 lost 0.8%, ending at 8,561.80

Meanwhile, Taiwan’s Taiex climbed 0.9%, and India’s Sensex advanced 0.2%. Thailand’s SET slipped by 0.3%.

Market Movements Driven by Tariffs and Tech

In Jakarta, markets rose 0.7% after President Trump announced plans on Truth Social to impose a 19% tariff on Indonesian imports, while exempting U.S. goods headed to Indonesia. He also stated that Indonesia has agreed to buy U.S. energy, agriculture, and aviation products—a move that sparked optimism in local equities.

On Wall Street, the global markets felt the pressure of rising inflation. The S&P 500 fell by 0.4%, staying close to last week’s record high. The Dow Jones Industrial Average dropped 1%, while the Nasdaq gained 0.2%, closing at a record 20,677.80, thanks largely to Nvidia.

Nvidia shares rose 4% following confirmation from the U.S. government that it will receive licenses to ship its H20 AI chip. This tech boost provided a counterbalance to otherwise negative sentiment across the broader market.

Federal Reserve Stance and Market Outlook

Investors are closely watching the Federal Reserve, which has held interest rates steady in 2025. President Trump has continued pressuring the Fed to cut rates more aggressively, arguing that it would support economic growth. However, Fed Chair Jerome Powell has emphasized the need for more data, particularly on the inflationary effects of tariffs, before adjusting policy.

In commodities, U.S. benchmark crude slipped 21 cents to $66.31 per barrel, while Brent crude dropped 31 cents to $68.40.

Currency markets also showed slight movements. The dollar weakened to 148.79 yen from 148.87, while the euro strengthened slightly to $1.1630 from $1.1602.

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