US Market Rises on Rate Cut Expectations and India Faces 50% Tariffs

In the week gone by, global stock markets exhibited mixed performance amid ongoing volatility. U.S. equities saw a rotational shift, with the S&P 500 and Dow Jones Industrial Average achieving record closing highs, driven by resilient economic data and an 88.8% market-implied probability of a 25-basis-point Federal Reserve interest rate cut in September 2025, following Chair Jerome Powell’s dovish signals at the Jackson Hole symposium.

In this blog, we’ll know in detail what happened last week (August 25, 2025 to August 29, 2025) all across the globe.

US GDP Expectations Rise

Nasdaq dipped slightly due to profit-taking in mega-cap tech stocks, amid concerns over the sustainability of AI infrastructure spending. An upward revision in U.S. GDP growth for Q2 2025 to 3.3% reflecting faster-than-expected economic expansion, and robust corporate earnings further bolstered investor sentiment.

European markets faced volatility due to ongoing tariff negotiations and mixed inflation trends. On the data front, PMI data showed eurozone output rising to 51.1, led by manufacturing growth, though consumer confidence weakened.

Political uncertainties, including a potential no-confidence vote against France’s Prime Minister François Bayrou on September 8, 2025, and risks of a 2024 budget rollover delaying deficit reduction, pressured markets.

UK Inflation and China Equities Jumped

UK inflation accelerated to 3.8%, influencing central bank caution. Chinese equities surged, with the CSI 300 rising 4.18% to a decade high, fueled by retail investor enthusiasm, low interest rates, and margin debt nearing record levels.

Data released during the week showed China’s industrial profits declined by 1.5% YoY in July 2025, an improvement from a 4.3% drop in June 2025. Japanese markets diverged, with the Nikkei 225 falling due to global risk aversion tied to U.S. tech concerns.

The yen weakened to the mid-JPY 158 range against the dollar, and bond yields rose amid expectations of Bank of Japan rate hikes following a 3.1% core CPI increase.

50% Tariffs Hit the Indian Market

In contrast, the Indian stock market faced headwinds, dragged by persistent foreign institutional investor outflows and U.S. tariffs on Indian exports, escalating trade tensions. Effective August 27, 2025, the U.S. imposed 25% secondary tariffs on Indian shipments, raising overall duties to 50%, impacting billions in export value.

In August, Fll stood net seller to the tune of ₹38,590.26 crores, which was, however, offset by net buying of ₹83,340.91 crores by the domestic institutions. Domestic resilience provided some support, with industrial production for July 2025 rising to a four-month high of 3.5%, following a strong August 2025 PMI release.

Fitch Ratings affirmed India’s Long-Term Foreign-Currency Issuer Default Rating at ‘BBB-‘ with a stable outlook, while S&P upgraded India’s sovereign rating to ‘BBB’ with a stable outlook.

Future Outlook

Going forward, the outlook remains cautiously optimistic, driven by a resilient domestic economy, GST rationalization, and prospects of a Federal Reserve rate cut. However, tariff-driven inflation and geopolitical uncertainties may sustain volatility.

So, open Demat account with SMC Global Securities and invest as per your investment objective and risk profile.

Reference:
SMC Global Securities’ Research Team

Author: All Content is verified by SMC Global Securities.