Fears over US tariffs are turning into reality, with President Donald Trump dispatching formal letters to 14 countries—many of them allies—informing them of higher duties due to take effect from August 1. While Trump has kept the door open for negotiations until the end of this month, the proposed tariffs are broadly in line with the steep rates announced in April.
Some rates have been increased, others slightly trimmed. However, the overall message is clear: countries that do not reach an agreement will face near-maximum tariffs. Trump noted that there is still time to strike deals, a stance some nations have found reassuring. As a result, Asian markets opened higher on Tuesday morning.
No decision has been finalised in trade talks between India and the United States. Media speculation of a deal announcement on Monday did not materialise. It remains unclear whether Trump intends to send a unilateral tariff letter to India. Analysts believe the proposed duty could be close to the 26 percent rate announced in April. For context, Vietnam—having agreed to a deal—faces a 20 percent duty, while Bangladesh, which has not, faces 35 percent. Tariffs for Japan and South Korea are set at 40 percent each, and Indonesia has been levied 32 percent. The trend suggests India may have little reason for optimism. The Indian rupee weakened amid the uncertainty.
Crude prices rose by around 2 percent after Houthi rebels in Yemen attacked oil tankers for a second consecutive day. Following Sunday’s strike on a Greek vessel, a Liberian tanker was hit on Monday. This came even after Israel reportedly responded by launching missiles at a Houthi-controlled port. The renewed attack has heightened supply concerns.
In the derivatives market, Gift Nifty closed at 25,475.50 on Monday night and briefly climbed to 25,515 in early trade before slipping again. The movement suggests a weak start for Indian equities on Tuesday.
European markets ended higher on Monday, buoyed by hopes that the US would moderate its tariff decisions. The euro gained ground, reflecting investor optimism.
However, US markets fell sharply. The Dow Jones Industrial Average dropped 422.17 points (0.94 percent) to close at 44,406.36. The S&P 500 fell 49.37 points (0.79 percent) to 6,229.98, while the Nasdaq Composite slid 188.59 points (0.92 percent) to 20,412.52. US futures were in the red early Tuesday, with Dow, S&P, and Nasdaq futures down 0.22 percent, 0.16 percent, and 0.10 percent, respectively.
Asian markets too opened lower. Japan’s Nikkei was down 0.55 percent, South Korea’s benchmark dropped 0.50 percent, and Hong Kong and Chinese indices also posted early losses.
The Indian equity markets ended on Monday mostly flat despite volatility caused by growing uncertainty around the US trade deal. FMCG majors and Reliance Industries helped cap the downside.
The Nifty 50 edged up just 0.30 points to 25,461.30, while the Sensex added 9.61 points to settle at 83,442.50. Bank Nifty slipped 82.70 points (0.15 percent) to 56,949.20. The mid cap 100 index lost 162.00 points (0.27 percent), closing at 59,515.75, and the small cap 100 fell 82.90 points (0.44 percent) to 18,950.15.
Market breadth was negative. On the BSE, 1,649 stocks advanced while 2,436 declined. On the NSE, 1,152 gained and 1,791 declined. Sixty-one NSE stocks touched 52-week highs, while 38 hit 52-week lows. A total of 115 stocks hit the upper circuit and 74 the lower.
Foreign investors were net buyers on Monday, purchasing equities worth ₹321.16 crore in the cash segment. Domestic institutional investors bought shares worth ₹1,853.39 crore.
Market participants now await further clarity on the India-US trade deal and final US tariff decisions. The current signals suggest a low likelihood of a favourable outcome for India. Volatility is expected to remain high. Nifty may find support at 25,420 and 25,370, while resistance is likely at 25,485 and 25,540.
Gold began climbing again towards its record highs amid concerns that new tariffs would hurt global trade and nudge economies towards recession. The lack of any substantial deviation from the high tariff rates announced in April added to market nervousness.
Gold prices, which had dipped below $3,300 per ounce earlier, recovered to close at $3,337.39 on Monday. It eased slightly to $3,335 in early Tuesday trade, partly due to Trump’s comment that talks were still possible. In Kerala, gold dropped by ₹400 per sovereign on Monday to ₹72,080. Silver slipped to $36.68 per ounce.
In global commodity markets, rubber fell 0.73 percent to 162.70 cents per kilogram. Cocoa surged 2.89 percent to $8,179.52 per tonne. Coffee dropped 3.5 percent while tea gained 0.58 percent. Palm oil rose 0.20 percent.
The US dollar index, after rising sharply, eased to 97.32 in early on Tuesday trade from a Monday close of 97.48. The euro stood at $1.1746, and the pound recovered to $1.3635 after a brief dip. The Japanese yen weakened to 145.87 per dollar.US 10-year bond yields rose to 4.381 percent as prices fell.
The rupee weakened on Monday, touching 86.03 against the dollar during the session before recovering 46 paise to close at 85.85. The Chinese yuan weakened to 7.175 per dollar.
Brent crude was trading at $69.27 per barrel on Tuesday morning. WTI was at $67.60, while Murban crude stood at $71.11. Natural gas prices declined 0.85 percent. Bitcoin fell to $108,300, while Ether gained to reach $2,550.