Global stock markets mostly settled higher on Friday, as investors, especially on Wall Street, tried to make light of US President Donald Trump's new wave of steep import tariffs that triggered new uncertainties on trade and economic outlook.
Mr Trump on Thursday announced that his government will be imposing levies of 100 per cent on pharmaceutical drugs, 50 per cent on kitchen and bathroom equipment, 30 per cent on upholstered furniture and 25 per cent on heavy lorries beginning October 1.
The US is also considering tariffs on electronic devices from overseas based on the number of chips each has, Reuters reported on Friday.
For pharmaceuticals in particular, while Mr Trump's move is being seen as designed to force drug manufacturing back in the US, the tariffs threaten to raise costs, disrupt supply chains and accelerate capital flows away from US markets, which may lead to a global investor exodus, said Nigel Green, chief executive of Dubai-based financial services firm deVere Group.
“A tariff of this magnitude on high-value medicines will ripple through every part of the global health economy,” he said.
“Rather than sparking a manufacturing renaissance, it’ll deter investment, heighten inflationary pressure and drive sophisticated capital to markets that remain open and predictable.”
Meanwhile, investors also sought clues from US economic data. On Thursday, official figures showed that gross domestic product hit 3.8 per cent in the second quarter – well above an anticipated 3.3 per cent and the quickest pace in almost two years – as consumers spending, which makes up two thirds of America's economy, grew faster than expected.
The personal consumption expenditures price index, meanwhile, climbed 2.7 per cent annually in August.
That placed more bets that the US Federal Reserve will further cut interest rates after it slashed rates last week for the first time in the second administration of Mr Trump, who has been relentless in his pressure for lower rates.
But the Fed's moves remain a wait-and-see game, considering that the US central bank "has been more tolerant of overshooting lately, pointing to downside risks to jobs", said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
"As such, data in line with expectations – or ideally softer – could revive risk appetite. A hotter print, though, would prolong the pause to the risk rally and reinforce the idea that the Fed may stay patient well into next year before cutting," she added.
On Wall Street, gains among indices did not prevent a weekly loss, snapping a run over the past weeks.
The Dow Jones Industrial Average settled 0.65 per cent higher, the S&P 500 added 0.59 per cent and the tech-heavy Nasdaq Composite increased 0.44 per cent.
For the week, the Dow inched down 0.1 per cent, the S&P retreated 0.3 per cent and the Nasdaq gave up 0.7 per cent. Year-to-date, they are still up 8.7 per cent, 13 per cent and 16.4 per cent, respectively.
In Europe, London's FTSE 100 was 0.8 per cent higher at the close to post a weekly gain, buoyed by banking stocks and defying the pessimism over the new US tariffs.
Paris's CAC 40 added 1 per cent and Frankfurt's DAX rose 0.9 per cent.
Earlier in Asia, stock markets settled lower amid the new US tariffs and investor uncertainty over the Fed's direction.
Hong Kong's Hang Seng retreated the most among major indices, closing 1.4 per cent lower. Tokyo's Nikkei 225 shed 0.9 per cent, while the Shanghai Composite slid 0.7 per cent.
In commodities, oil prices settled more than 1 per cent higher on Friday and posted their biggest weekly gains since June as Mr Trump increased pressure on buyers of Russian oil and Ukraine carried out new attacks on Moscow's energy infrastructure.
Brent rose 1.02 per cent to $70.13 a barrel, the first time it finished above $70 since late July. West Texas Intermediate jumped 1.14 per cent to $65.72 per barrel. From last week's close, they surged 6.19 per cent and 5.32 per cent, respectively.
Gold, meanwhile, was steady on the US economic data, which investors saw as a driving factor for the Fed to cut interest rates further.
Spot gold added 0.53 per cent to close at $3,759.86 an ounce. The precious metal, considered a hedge against inflation, is now up nearly 41 per cent in 2025.
