U.S. President Donald Trump's latest tariff target has been India over its purchase of Russian oil right after it retargeted its sanction toward Russia's "shadow fleet" mainly selling to India and China. India's foreign ministry responded defiantly, calling Trump's targeting "unjustified and unreasonable" and vowing to protect its national interests and economic security. India defended its Russian oil imports as a necessity after traditional supplies were diverted to Europe after the Ukraine conflict spread, while pointing out Western hypocrisy by noting that EU trade with Russia significantly exceeds India's total trade with Russia. The dispute has already impacted India's currency, with the rupee hitting a record low against the dollar, though Indian refiners have reportedly paused Russian oil purchases due to narrowing price discounts. This escalation between the U.S. and India in trade came after Trump imposed 25% tariffs on Indian imports over its membership in the BRICS group. India's unexpected response shows its determination to pursue an independent foreign policy without succumbing to American pressure, a significant shift from the traditionally diplomatic tone in bilateral relations.
EQUITY
All major indexes opened the week with their biggest daily percentage gains since May 27, recovering from last week's shock mainly through bargain hunting. Communications services led sector gains, while technology stocks had also gained, with notable contributions from Nvidia, Microsoft, and Broadcom, suggesting a rate outlook correction. Market bets are now at a staggering 94% probability of a September rate cut, considering massive job data revision.
GOLD
The shiny metal closed its three-day rally streak at around $3,373, reacting to July nonfarm payrolls falling short of expectations with major downward revisions to May and June figures. A rate cut seems imminent with a weakening U.S. dollar, making dollar-denominated bullion cheaper for international buyers and enhancing gold's value. Gold posted its biggest gain in two months on Friday and has continued to hold these elevated levels.
OIL
Crude oil notched three consecutive losing days following OPEC+'s decision to increase production by 547,000 barrels per day starting in September as part of a phased reversal of voluntary cuts made in 2023. President Trump's threat to countries purchasing Russian oil provided little support as Washington seeks to pressure Moscow toward a peace deal with Ukraine.
CURRENCY
The US dollar is steady even with Goldman Sachs forecasting three consecutive cuts starting in September, up from 2 cuts projected by other fund houses. The political side might threaten the dollar given Fed Governor Adriana Kugler's resignation and President Trump's dismissal of a top statistics official, opening up the possibility of additional terminations.
