2025-07-21 07:04

Key takeaways 2025 has been a bumpy ride for US stocks, with trade policy uncertainty near record highs. With higher tariff rates, company input costs are likely to rise – so, exposure to firms with higher margins can provide a buffer. Over the past couple of years, the gap between longer- and shorter-dated US Treasury yields has been widening. This so called “curve steepening” has come amid gradual Fed easing and a higher term premium – the extra compensation that investors demand for holding longer-term bonds (usually because of inflation and interest rate uncertainty). Vietnam became the first Asian economy to agree an outline post-Liberation Day trade deal with the US in early July. While negotiations continue, the agreement looks set to cut the tariff on Vietnamese imports to the US to 20% – down from the 46% reciprocal rate that had been on the table. Chart of the week – China’s policy boost Last week’s raft of economic data out of China delivered a mixed picture, with continuing sector divergence, domestic supply-demand imbalances, and muted inflation. Among the positives, exports have been resilient, and industrial output has seen solid growth momentum, with high-tech sectors leading the way. Frontloaded fiscal stimulus drove a rebound in the credit impulse (see chart). But retail sales softened after a strong May, and property sector activity weakened. Overall, China’s real GDP growth held up at 5.2% year-on-year in Q2. But nominal growth fell to 3.9% year-on-year from 4.6% in the previous quarter, with the GDP deflator remaining negative. What do we make of this? Apart from the flagging property sector, robust first-half activity suggests no urgency for new policy stimulus, although further support is still likely given the uneven recovery and supply-demand imbalances. Meanwhile, the trade outlook faces the risk of a global slowdown, US policy uncertainty, and geopolitical tensions. From here, generally stable conditions could give policymakers space to focus on structural priorities and long-term strategies for resilience, rebalancing, and quality growth. On top of trade-in subsidies, we expect more policy support for service consumption and the social safety net, while on the supply-side, a policy push to curb excessive competition in some sectors has intensified recently. There could be further efforts to stabilise the property sector. With sectors like technology now building momentum, this continuing policy boost can potentially drive returns both locally and across other emerging markets. Market Spotlight Private equity – ready for a rebound? It’s been a game of two halves for private equity investors in 2025. Private equity deal flow started well in the first quarter, continuing the 2024 trend of rising dealmaking and exits (asset sales). The anticipation had been that a pro-business Trump administration could provide a boost to private equity activity. However, the introduction of Liberation Day tariffs and policy uncertainty have put pressure on dealmaking. Preliminary second quarter figures from Pitchbook show estimated global deal value down 15.3% compared to the first quarter, and marginally down year-on-year. Meanwhile, exits, which started the year well, have been challenged by a quieter M&A and IPO market. On a positive note, exits are happening at attractive multiples, highlighting the ability of PE general partners (GPs) to generate value despite market challenges. Bigger picture, private equity has historically achieved strong returns after challenging phases, such as after the global financial crisis and the pandemic. GPs can often purchase companies at lower valuations and then benefit from rebounds in the market environment. There is dry powder waiting to be deployed once market conditions settle, confidence returns, and valuation gaps narrow. The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Past performance does not predict future returns. The level of yield is not guaranteed and may rise or fall in the future. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector, or security. Diversification does not ensure a profit or protect against loss. Any views expressed were held at the time of preparation and are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Source: HSBC Asset Management, Bloomberg. Data as at 7.30am UK time 18 July 2025. Lens on… Quality time 2025 has been a bumpy ride for US stocks, with trade policy uncertainty near record highs. In periods of uncertainty, investors crave safety, which can favour Quality stocks that typically have higher gross profit margins, superior cashflows, and healthier balance sheets versus sector peers. With higher tariff rates, company input costs are likely to rise – so, exposure to firms with higher margins can provide a buffer. That makes it surprising that Quality in the US – where margins are particularly under threat – has underperformed more than in non-US markets such as Europe and emerging markets this year. Data provided by some Quant Equity Research analysts show US Quality lagging the S&P 500 by 2%, while Momentum has delivered the strongest return. Quality is rarely cheap given its resilience, and it performed well in 2024, which might explain its recent weak performance. But this has opened up some decent valuation opportunities in the factor. Against a backdrop of still elevated economic and geopolitical risks, there could be more reason to like it. Curve appeal Over the past couple of years, the gap between longer- and shorter-dated US Treasury yields has been widening. This so called “curve steepening” has come amid gradual Fed easing and a higher term premium – the extra compensation that investors demand for holding longer-term bonds (usually because of inflation and interest rate uncertainty). Some fixed income experts think further curve steepening is possible. The gap between 10 and two-year yields is below its long-term average. With US deficits projected to remain around 6% to 7% of GDP in the coming years, a higher supply of Treasuries could put upward pressure on long-end yields. US tariff policies have also increased inflation uncertainty. Curve steepening should also be supported from the short end once the Fed restarts monetary easing, especially if a weaker economy pushes the Fed to cut rates by more than market currently expects. Meanwhile political interference with the Fed, for example pushing for more dovish policy, could not only push shorter-term yields lower, but also longer-end yields higher as investors question the Fed’s reliability in tacking inflation. Vietnam at the frontier Vietnam became the first Asian economy to agree an outline post-Liberation Day trade deal with the US in early July. While negotiations continue, the agreement looks set to cut the tariff on Vietnamese imports to the US to 20% – down from the 46% reciprocal rate that had been on the table. It looks possible that goods routed – or transhipped – through Vietnam to the US from other countries will attract a higher tariff rate. Vietnam has become a fast-growing frontier manufacturing hub in recent years. Despite global policy uncertainty, this export-led development contributed to year-on-year GDP growth of 7.5% in the first half of 2025, and has led the highest levels of foreign direct investment since 2009. Vietnamese stocks rallied in response to the trade deal, contributing to a pick-up in the MSCI Fronter index given the country’s significant weighting in it. The Frontier index is outperforming both Emerging and World indices this year. Past performance does not predict future returns. The level of yield is not guaranteed and may rise or fall in the future. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector, or security. Diversification does not ensure a profit or protect against loss. Any views expressed were held at the time of preparation and are subject to change without notice. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. You cannot invest directly in an index. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Source: HSBC Asset Management. Macrobond, Bloomberg, Data as at 7.30am UK time 18 July 2025. Key Events and Data Releases Last week The week ahead Source: HSBC Asset Management. Data as at 7.30am UK time 18 July 2025. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector or security. Any views expressed were held at the time of preparation and are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Market review Risk markets were stable despite persistent global trade uncertainties. The US dollar gained against major currencies. Long-end US Treasury yields moved higher, driven by increased signs of tariff-related rises in goods prices and stronger-than-expected retail sales data, while German Bund yields edged lower. US IG and HY credit spreads remained compressed. In equity markets, US stocks advanced as investors assessed Q2 earnings, with the tech-heavy Nasdaq outperforming. The Euro Stoxx 50 index was range-bound amid investor concerns over lingering US-eurozone trade tensions. In Asia, Japan’s Nikkei 225 rose modestly ahead of July’s upper house elections. Hong Kong’s Hang Seng rallied, propelled by tech stocks’ strong performance. Benchmark indices in Thailand and Indonesia surged, but India’s Sensex index weakened. In commodities, oil and gold prices consolidated. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-weekly/chinas-policy-boost/

2025-07-16 08:05

Key takeaways Growth has been off to a decent start this year, but external and domestic headwinds still present challenges. Policy easing may focus on consumption and jobs, while the property market has yet to fully stabilise. The emphasis of China’s next five-year plan, due in Q4, will likely be on transitioning towards higher-quality growth. China data review (June & Q2 2025) GDP growth picked up to 5.2% y-o-y in Q2 and rounded out H1 at 5.3%. While this puts the economy in a better position to reach the “around 5%” growth target this year, the June print showed that some headwinds still persist. Fixed asset investment saw its first y-o-y contraction since November 2021, slowing to -0.1% in June. The property sector slowdown continued to weigh on growth, with property investment falling 12.9% y-o-y, while infrastructure and manufacturing investment both decelerated despite the ongoing rollout of fiscal support as seen in high levels of government bond issuance. Industrial Production rose 6.8% y-o-y in June, receiving a boost from both a temporary external calm due to the reciprocal tariff pause between China and the US and ongoing domestic policy support to cultivate new growth drivers and promote consumer trade-ins and equipment renewals. Relatedly, high-tech manufacturing still led the growth as it rose 9.7% y-o-y in the month. Retail sales were up 4.8% y-o-y in June, down from 6.4% in May, as some subsidies for trade-in programs dried up, weighing on purchases of household appliances and consumer electronics. However, even as some local governments reported the expiration of some funds, almost half of the trade-in subsidy funds are still due to be distributed in the rest of the year. CPI inflation rose 0.1% y-o-y in June, as a steady pickup in core CPI (+0.7% y-o-y) provided a welcome boost, driven by ongoing consumption policy stimulus which continued to support prices of durable goods. But PPI fell further, -3.6% y-o-y, with drags from relatively weak oil prices, excess capacity and insufficient end-demand across some sectors, including along the housing supply chain. Exports grew 5.8% y-o-y in June, boosted by the recent reciprocal tariff pause between the US and China. Shipments to the US saw some recovery as the decline narrowed to -16.1%, up from a low of -34.5% in May. Imports rose 1.1% y-o-y, the first rise since February, as demand was lifted by more fiscal support, bolstering infrastructure-related construction and equipment upgrading. China stimulus: Not in a rush Tariff turbulence with the US has dominated the headlines. While we see two sided-risks on US-China trade from ongoing negotiations, China’s trade-weighted tariff on exports to the US remains at around 50%, including the c20% in place before Trump 2.0. But despite the steep tariff hike, recent trade data has been holding up, as front-loading and trade restructuring have helped to offset the impact. Domestic economic data has also been relatively firm. Pro-growth policies While some downside risks have moderated, we still see pressures on growth. Externally, it’s uncertain whether the US and China can strike a deal before 14 August, the end of the 90-day tariff pause agreed during the Geneva talks. Domestically, over 12 million university graduates this year will add pressure to the labour market, while certain industries are consolidating. Consumption continues to recover, but ongoing property sector weakness lingers. We expect China to roll out pro-growth measures already in the pipeline, though a ‘bazooka’ stimulus seems unlikely. With policymakers favouring structural solutions for structural issues, support is likely to be directed at stimulating consumption and stabilising the job market. Consumption policies are focussing on near-term measures, such as subsidies for durables, and long-term stimulus, such as through expansion of social safety nets and pension reforms. Property holding up Though still a concern, the housing market no longer appears to be the government’s primary policy focus. So long as the situation remains manageable, we don’t expect ‘bazooka’-style measures to be introduced. Most recently, the Central Urban Work Conference was held from 14-15 July, and emphasized a new urbanisation model, which could involve more urban village renovations as well as development of city clusters. Meanwhile, implementation of announced measures continues, for example, with Zhejiang province recently saying that it would use special local government bonds to purchase commodity housing. However, the subdued national trend may have masked a significant dichotomy in the recovery – large cities with population inflows are exhibiting faster rebounds. Higher-quality growth The Outline of the 15th Five-Year Plan will likely to be released in Q4 2025. The emphasis will be on facilitating China’s long-term transition towards higher-quality growth, likely echoing the areas we already see policy pivoting towards in recent years, including frontier technology fields, new forms of consumption, and green development. Source: Wind, HSBC Source: Wind, HSBC Source: LSEG Eikon * Past performance is not an indication of future returns Source: LSEG Eikon. As of 14 July 2025 market close https://www.hsbc.com.my/wealth/insights/market-outlook/china-in-focus/china-stimulus-not-in-a-rush/

2025-07-14 08:06

Key takeaways The RBA kept rates on hold in July, despite widespread expectations for a 25bp cut. The RBNZ’s rate pause was, nevertheless, much anticipated, with its tone turning slightly more dovish. We turn neutral on AUD-NZD and believe risk sentiment will be crucial for AUD-USD and NZD-USD in the months ahead. On 8 July, the Reserve Bank of Australia (RBA) surprised markets with a 6-3 vote in favour of keeping its policy rate unchanged at 3.85%. The RBA wanted more information on inflation and mentioned that the downside risks to global uncertainty have receded. We think the decision is only marginally positive for AUD-USD, as the conviction should remain for further RBA easing, albeit in a less front-loaded manner. Markets currently almost fully price in a 25bp cut in the RBA’s next meeting on 12 August (Bloomberg, 10 July 2025). Unlike the RBA, the Reserve Bank of New Zealand’s (RBNZ) decision on 9 July was in ine with expectations. Elevated near-term inflation (driven by food prices and dministered price increases) and strong export prices convinced the RBNZ to keep its olicy rate unchanged at 3.25% and wait for more data to be released, like 2Q CPI data 21 July) and the labour market report (6 August). Markets see a c70% chance for he RBNZ delivering a 25bp cut in its 20 August meeting (Bloomberg, 10 July 2025).Overall, the RBNZ’s tone has turned slightly more dovish from the last meeting.Given the latest rhetoric of both central banks, we turn neutral on AUD-NZD. Source: Bloomberg, HSBC Source: Bloomberg, HSBC Looking beyond the central banks’ decisions, we believe “risk on” sentiment is likely to support both the AUD and NZD (see charts above) in the months ahead. Nevertheless, the headlines around US trade policy will drive the narrative over the near term. A sequence of letters has recently been sent to several US trading partners, outlining new tariff levels that will come into effect on 1 August. There was also the announcement of copper tariffs of 50% to be implemented from 1 August, and a mooted 200% tariff on pharmaceuticals, although the implementation here may be some way off. With the tariff deadline extending, the impact on FX markets has been rather muted, but if there is any re-escalation in trade tensions, the AUD and NZD could underperform the EUR, JPY, and CHF. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/aud-and-nzd-julys-rate-pause-amid-trade-uncertainty/

2025-07-14 07:05

Key takeaways At first sight, you’d be forgiven for thinking that after a slow start to the year, US stocks have finally caught up with their European counterparts. In local currency terms, the performance differential between European and US indices has certainly narrowed – although it still favours Europe. Foreign investments into Asian markets have risen sharply over the past 25 years. Global factors – like recent US dollar weakness – drive these flows, but local valuations, earnings growth, and supportive policy play an increasingly influential role. The global landscape is shifting from a world dominated by a single economic power to one where influence is shared across multiple regions. Chart of the week – What to watch in Q2 profits season Q2 profits reporting season gets started in earnest in the US this week against a backdrop of continued uncertainty about further tariff announcements. A strong Q1, helped by firms frontloading ahead of expected tariffs, saw year-on-year profits grow by 13% – double consensus expectations at the start of the year. Today, all eyes are on whether Q2 will see something similar. Forecasts have been falling through the quarter – in part driven by tariff uncertainty – leaving expected year-on-year growth at a modest 5%. The big question remains – will companies absorb tariffs, or pass them on? Evidence so far suggests that many are initially choosing to soak them up to protect market share. With net profit margin estimates at an above-average 12.8%, companies appear to have space to weather these headwinds. This implies margins may struggle to increase as analysts expect over the coming quarters, especially if the economy slows. Meanwhile, last week’s news that Nvidia had become the first USD4 trillion market cap company is a reminder of the outsized influence of the technology and communication services sectors on the US stock market. Together, they account for over 60% of expected profit growth in 2025. However, tech sector valuations and profitability levels are back at all-time highs, which could make beating profit forecasts more challenging. So, while global investors can’t ignore US stocks (see page 2), dollar weakness and profits challenges indicate that US exceptionalism is fading, which should encourage a broadening out of performance globally. Market Spotlight Megatrend investing A key investment attraction of listed infrastructure is its role as a long duration play that can potentially generate dependable cashflows and high dividend yields. For that reason, it tends to be a defensive, low volatility building block. So, it’s eye-catching that recent returns from listed infrastructure are linked to its strong connection to sectors involved in one of the biggest megatrends in global markets – AI. Take the rapid roll-out of data centres in the US. Major construction of facilities to power AI has been an unfolding infrastructure theme for some time, and big-tech hyperscalers remain active in the sector. Meanwhile, data centres are fueling vast demand for power generation. Against a backdrop of the longer-term energy transition, this is driving investment in key areas like electrification, transmission, and distribution grids. After a strong recent performance from the US infrastructure-related sectors, some infrastructure analysts think there could now be more compelling valuations found in Europe, the UK, and China on a relative basis. Meanwhile, at around 4%, the current average dividend from infrastructure is well above the average for global equities – reinforcing its appeal as a defensive income option for portfolios. The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Past performance does not predict future returns. The level of yield is not guaranteed and may rise or fall in the future. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector, or security. Diversification does not ensure a profit or protect against loss. Any views expressed were held at the time of preparation and are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Source: HSBC Asset Management, Bloomberg. Data as at 7.30am UK time 11 July 2025. Lens on… Spot the difference At first sight, you’d be forgiven for thinking that after a slow start to the year, US stocks have finally caught up with their European counterparts. In local currency terms, the performance differential between European and US indices has certainly narrowed – although it still favours Europe. But in euro terms, US stocks are still down 6% in 2025. Much of the difference is to do with the weaker US dollar. Global investors normally leave equity allocations unhedged – because stock market volatility tends to dominate FX volatility – and for years exposure to the strong dollar has been a return driver. But that’s not the case this year. Meanwhile, the recent pick-up in US momentum reflects a combination of investor relief post-Liberation Day, and resurgent interest in the AI and technology megatrend. And the tailwind of a weaker dollar boosts the profitability of the US’s world-leading exporters. So, even at today’s rich forward price/earnings ratio of 22x, and with weak macro vibes weighing on profits, investors can’t overlook US stocks. But it all makes for a complicated outlook for global investors, and a key lesson from H1 is that FX can’t be ignored. Ebb and flow Foreign investments into Asian markets have risen sharply over the past 25 years. Global factors – like recent US dollar weakness – drive these flows, but local valuations, earnings growth, and supportive policy play an increasingly influential role. Research by some Multi-Asset analysts shows that the region is evolving in how it absorbs and responds to global economic forces. In the past, equity flows surged on tech-led booms in Taiwan and South Korea, and the economic rise of India and mainland China. But they partly reversed amid the post-pandemic slowdown and policy uncertainty. Big exporters saw sharp outflows, but domestically-focused economies in India, Indonesia and the Philippines were much more resilient. Bond flows were also vulnerable to macro shocks but have tended to be more stable, especially in markets with favourable policies and supportive structures, like ASEAN and mainland China. Against a backdrop of fading US exceptionalism and a broadening out of global leadership, the research shows that Asian markets are becoming more resilient. G-zero economics The global landscape is shifting from a world dominated by a single economic power to one where influence is shared across multiple regions. The traditional dominance of the US or G10 economies is giving way to a fragmented “G-zero” landscape, where no single country has the capacity to lead. This presents complex dynamics and opportunities for investors. One outcome has been a rise in geopolitical tensions. The number of international conflicts has increased in recent years, adding uncertainty to the macroeconomic outlook. It can contribute to an environment of frequent supply shocks, volatile inflation, and constrained growth. Yet in a G-zero landscape, emerging and frontier markets – such as India, Indonesia, Brazil and Vietnam – are gaining economic and political influence. Many are building deeper trade relationships, investing in domestic capacity, and benefitting from demographic trends. These markets are well-positioned for future growth but are underrepresented in global portfolios. In a more fragmented world, diversification across these economies can help investors manage risk and access structural upside. Past performance does not predict future returns. The level of yield is not guaranteed and may rise or fall in the future. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector, or security. Diversification does not ensure a profit or protect against loss. Any views expressed were held at the time of preparation and are subject to change without notice. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. You cannot invest directly in an index. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Source: HSBC Asset Management. Macrobond, Bloomberg, Uppsala Conflict Data Program. Data as at 7.30am UK time 11 July 2025. Key Events and Data Releases Last week The week ahead Source: HSBC Asset Management. Data as at 7.30am UK time 11 July 2025. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector or security. Any views expressed were held at the time of preparation and are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. Market review Risk markets were cautious ahead of the start of the Q2 earnings season in the US, with trade uncertainty weighing on sentiment. The US dollar index saw modest gains. US Treasuries were firm, supported by solid debt auction results. US IG and HY spreads widened, in contrast to narrowing corporate spreads in Europe. In stock markets, the S&P 500 hovered near its record high. The Euro Stoxx 50 advanced, and the UK’s FTSE 100 reached an all-time high, driven by strength in mining stocks. Japan’s Nikkei 225 lagged, as longer-dated JGBs weakened amid persistent fiscal concerns ahead of election. Other Asian markets broadly rose, with South Korea’s Kospi leading the rallies. Chinese equities also traded higher, but India’s Sensex declined. In Latin America, Brazil’s Bovespa fell on growth concerns and tariff uncertainty. Meanwhile, oil and gold prices consolidated. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-weekly/what-to-watch-in-q2-profits-season/

2025-07-09 07:05

Key takeaways The reciprocal tariff discussions are keeping markets on their toes… …with the recent economic data proving messy making it hard for policymakers to get a clear steer on the economy. We recently raised our 2025 global GDP growth forecast to 2.5%, with notable upgrades in India and Brazil. Ahead of the revised 1 August deadline for additional reciprocal tariffs, tariff-related news has come to the forefront again. At the time of writing, it remains unclear what this means for multiple economies in terms of final tariff rates going forwards, but the door is open to more bilateral deals, or new tariff rates on economies with which the US is unlikely to reach an agreement. Trade talks ongoing Vietnam is an economy exposed to tariff uncertainty and has moved towards a deal that would see a 20% tariff on all US imports from Vietnam and 40% tariff on transhipped imports. Earlier agreed trade deals with the UK and mainland China are also in effect. For the UK, sector tariffs on autos and aerospace have been relaxed, but steel tariff rates remain uncertain, while China agreed to approve export licenses for critical minerals. In return, the US will lift recent export controls on Chinese goods (Fortune, 27 June). Trade talks with key trading partners are ongoing, though their outcomes remain uncertain. Source: Macrobond Source: Macrobond Improving survey data… Amid all these uncertainties, the macroeconomic outlook remains very hard to read. In addition, big legislative changes in the US following the passage of the Big Beautiful Bill will have fiscal consequences. Various survey data have improved from the April lows but still don’t show any clear signs of momentum and could be heavily influenced by frontloading effects (charts 1 and 2). In the US, business surveys fared better in June, but we are seeing signs of stockpiling of raw materials and rises in input costs. While CPI and PPI inflation are yet to reflect the impact of tariffs, we can see a lot of tariff-led inflation in the pipeline within the survey data. …and consumer outlook Meanwhile, the US unemployment rate fell slightly, as nonfarm payrolls surprised on the upside in June (charts 3 and 4). However, questions about the quality and reliability of data keep building – meaning that it’s getting even harder for central bankers to make informed decisions about the best path for policy. Data outside the US could be being propped up by the frontloading impacts, or, in mainland China’s case, domestic stimulus measures. That said, we are seeing lower inflation and interest rates outside the US improve the consumer outlook. Source: Macrobond Source: Macrobond. Tariffs, tariffs, tariffs The global growth outlook remains mired in uncertainty. While Middle East tensions appear to have calmed down for now, lowering the risk of a spike in oil prices, the questions over tariff rates, timings and how trade flows react are set to keep markets and economists on their toes over the next few months. Our GDP growth forecasts Growth outcomes were stronger than expected in many countries in Q1. Still, we see global GDP slowing from 2.8% in 2024 to 2.5% in 2025, despite some notable upgrades to India and Brazil which are less affected by tariffs. A weaker growth picture later this year and early next means our 2026 global GDP forecast is 2.3% in 2026. Note: *India data is calendar year forecast here for comparability. Previous forecasts are shown in parenthesis and are from the Macro Monthly dated 17 April 2025. Green indicates an upward revision, red indicates a downward revision. Source: Bloomberg, HSBC Economics Source: Bloomberg, HSBC ⬆ Positive surprise – actual is higher than consensus, ⬇ Negative surprise – actual is lower than consensus, ➡ Actual is in line with consensus Source: Refinitiv Eikon, HSBC https://www.hsbc.com.my/wealth/insights/market-outlook/macro-monthly/tariff-deadlines-in-focus/

2025-07-08 12:02

Key takeaways President Trump has sent letters to multiple countries announcing higher tariffs from 1 August, while many others are still waiting to either receive letters or reach a trade deal. The US will now impose 25% tariffs on imports from Japan and South Korea if no agreement is found by the new deadline. Around a dozen other countries, including Malaysia, Kazakhstan, South Africa, and Myanmar, are also facing new tariffs ranging from 25% to 40%. The global market reaction is mixed. US stocks fell around -1% but the possibility for negotiations is putting some Asian markets in the green today. The JPY weakened but KRW retraced its initial weakness. The announcements come as investors are already watching rising US debt levels and higher long-term borrowing costs, so there’s some mild pressure on bonds, though Fed rate cut expectations haven’t materially moved on the news. The new tariffs could raise the risk of upward pressure on inflation while weighing on corporate profit margins. That said, much of the hit to 2025 earnings expectations has already been priced in, with very conservative earnings growth assumptions for Q2. In the short term, investors will clearly watch for new sector and country-specific headlines. Please refer to the full report for details about the event and our investment view. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/tariff-deadline-pushed-back-to-august-1-resulting-in-further-uncertainty-for-global-financial-markets/