A look at the day ahead in European and global markets from Rae

Wee

Just as the word was slowly fading away from the memories of

investors, it has been foisted upon them again. Asian share

markets slumped on Friday after U.S. President Donald Trump made

his latest tariff salvo, and attention now turns to Europe.

Trump on Thursday unveiled punishing tariffs on a broad

range of imported goods, including 100% duties on branded drugs

and 25% tariffs on heavy-duty trucks, set to take effect from

October 1.

He also said he would start charging a 50% tariff on kitchen

cabinets and bathroom vanities and a 30% tariff on upholstered

furniture.

It remains unclear if the new levies would apply on top of

national tariffs or whether economies with trade deals such as

the European Union would be exempted.

The Trump administration's trade deals with Japan, the EU,

and the United Kingdom include provisions that cap tariffs for

specific products such as autos, semiconductors and

pharmaceuticals, which means the new higher national security

tariffs likely won't raise them above agreed rates.

Global drugmakers have also preemptively scrambled to shore

up their U.S. manufacturing capacity and domestic inventory.

The new 100% tariff on any branded or patented

pharmaceutical product will apply to all imports unless the

company has already broken ground on building a manufacturing

plant in the United States, said the president.

He also said companies such as Paccar ( PCAR )-owned

Peterbilt and Kenworth and Daimler Truck-owned

Freightliner could benefit from the tariffs on heavy-duty

trucks.

The reaction in Asia has been a heavy selloff in drugmakers

across the region, while an index tracking Chinese-listed

furniture makers slid more than 1%.

As it is, global equities had already been struggling on the

back of receding U.S. rate cut expectations after a slew of data

on Thursday underscored resilience in the world's largest

economy.

That threw into question the need for more aggressive policy

easing by the Federal Reserve, with traders moving quickly to

scale back bets of future rate cuts.

Markets are now pricing in just about 39 basis points worth

of easing by December this year, compared to more than 40 bps

earlier this week.

Fed policymakers have largely signalled restraint in cutting

rates further, citing concerns that tariffs could push inflation

up.

But the central bank's newest policymaker, Stephen Miran,

continued on Thursday to press for sharp U.S. interest-rate cuts

to prevent a labour market collapse.

Investors will get a better read on the U.S. economy later

on Friday with the release of the PCE data, where expectations

are for the core PCE price index to have risen 0.2% in August,

compared with July's 0.3% increase.

Key developments that could influence markets on Friday:

- US PCE data (August)

- Fed's Barkin, Bowman speak

(Editing by Muralikumar Anantharaman)