Asia stocks slide as Trump slaps new pharma tariffs, Fed cut bets recede

Shares of pharmaceutical companies across Asia tumbled in the aftermath, with Japan's Topix pharmaceutical index last down 1.2 per cent, while Hong Kong-listed innovative drug index fell 2 per cent

Shares in Asia slid on Friday, with pharmaceutical companies hit hard after US President Donald Trump unveiled a fresh round of punishing tariffs and as traders pared bets of sharp US rate cuts following stronger-than-expected economic data.

Trump announced the US would impose 100 per cent duties on imported branded drugs, 25 per cent tariffs on heavy-duty trucks and 50 per cent tariffs on kitchen cabinets.

He also said he would start charging a 50 per cent tariff on bathroom vanities and a 30 per cent tariff on upholstered furniture, with all the new duties to take effect from October 1.

Shares of pharmaceutical companies across Asia tumbled in the aftermath, with Japan's Topix pharmaceutical index last down 1.2 per cent, while the Hong Kong-listed innovative drug index fell 2 per cent.

Shares in South Korean drugmaker SK Biopharmaceuticals slid 3.6 per cent, while Australian biotech firm CSL was down 1.5 per cent.

An index tracking Chinese-listed furniture makers also dropped 0.7 per cent.

European futures were last trading higher, with EUROSTOXX 50 futures up 0.35 per cent while FTSE futures rose 0.2 per cent.

"We were bracing ourselves for the sectoral tariffs on pharmaceuticals ... I think the key thing is the details are still scant at this stage, but the tariffs seem to only apply to branded or patented drugs. So that's quite important, particularly for India," said Khoon Goh, head of Asia research at ANZ.

"But I think the initial knee-jerk reaction most likely would see probably a continuation of the equity market weakness that we've seen, as investors take a cautious approach."

The announcements, made on Truth Social, did not include details about whether the new levies would apply on top of national tariffs or whether economies with trade deals such as the European Union and Japan would be exempted.

Washington's trade deals with Japan, the EU, and Britain include provisions that cap tariffs for specific products such as autos, semiconductors and pharmaceuticals, which means the new higher national security tariffs likely will not raise them above agreed rates.

Nasdaq futures were down 0.1 per cent while S&P 500 futures dipped 0.06 per cent.

Broader indexes in Asia were meanwhile in the red, with the Nikkei last down 0.6 per cent while Hong Kong's Hang Seng Index was off 0.5 per cent.

China's CSI300 blue-chip index eased 0.3 per cent, and MSCI's broadest index of Asia-Pacific shares outside Japan was down 1 per cent.

Fed cut bets recede

Also adding to headwinds for stocks were reduced expectations of aggressive Federal Reserve rate cuts, after a slew of data on Thursday suggested the US economy remains in rude health.

"Robust economic data - such as stronger durable goods orders and an upward revision to GDP ... has shifted expectations around future rate cuts and driven the dollar higher," said Shier Lee Lim, Convera's lead FX and macro strategist for APAC.

"US equities have sold off modestly as rate cut optimism fades."

Traders are pricing in just about 39 basis points worth of rate cuts by December this year, compared to more than 40 bps earlier this week.

Focus will now be on PCE data due later on Friday, which could provide further clarity on the outlook for rates.

"There was some bullish optimism built into markets, because everybody started thinking we're going to get somewhere between four and six rate cuts, and now I think we're probably looking at four at most, and maybe even that seems a bit generous at this point of time into the end of 2026," said Tony Sycamore, a market analyst at IG.

While most Fed policymakers continue to strike a cautious tone on the pace of future easing, the central bank's newest policymaker, Stephen Miran, on Thursday pressed for sharp US interest-rate cuts to prevent labour market collapse.

The dollar gave up some gains on Friday though remained set for a weekly gain of about 0.7 per cent against a basket of currencies, buoyed by the receding rate cut bets.

The yen languished near the 150-per-dollar level and was headed for a weekly fall of more than 1 per cent, while the euro last bought $1.1681.

In commodities, oil prices edged higher and were on track for their biggest weekly gain in three months. Brent crude futures were up 0.23 per cent at $69.58 a barrel, while US crude rose 0.42 per cent to $65.25 per barrel. [O/R]

Spot gold fell 0.1 per cent to $3,745.53 an ounce. [GOL/]