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Global markets rallied as the U.S. and China agreed to reduce tariffs and pause new duties for 90 days, lifting equities and oil prices while easing recession fears. S&P 500 and Nasdaq futures surged, and Brent crude rose over 3%, signaling renewed optimism for global trade. Meanwhile, Asian pharma stocks slid after Donald Trump pledged steep U.S. drug price cuts, raising regulatory risks for the sector. In South Asia, Pakistani and Indian stocks soared following a ceasefire, shifting focus back to growth prospects. On the tech front, Bank of America reaffirmed a bullish outlook for AI capex in 2025, with Nvidia and Broadcom identified as top beneficiaries of robust hyperscaler spending.

Markets Rally as U.S. and China Agree to Tariff Reductions and 90-Day Pause

Global markets surged after the U.S. and China reached an agreement to cut tariffs and implement a 90-day pause in their trade dispute. The U.S. reduced tariffs on Chinese imports to 30%, while China’s duties on U.S. goods fell to 10%. S&P 500 and Nasdaq futures jumped 2.8% and 3.6%, respectively, with Europe’s STOXX 600 gaining 1%. The dollar strengthened, rising 1.1% against the yen, while 10-year U.S. Treasury yields climbed 6 basis points to 4.435%.

Analysts described the move as a “step in the right direction,” boosting risk sentiment and easing concerns over global supply chain disruptions. However, the temporary nature of the agreement suggests further volatility if a final deal is not reached.

Investment Insight

The tariff reduction and market rally create opportunities in equities, particularly in export-driven sectors and Chinese ADRs. However, the 90-day pause is a reminder of ongoing uncertainty. Investors should remain cautious, prioritizing companies with resilient supply chains. Diversifying into high-quality bonds or U.S. dollar assets may mitigate risks from potential volatility as negotiations continue.

Trump’s Drug Price Pledge Rattles Pharma Stocks

Asian pharmaceutical stocks slid on Monday as former President Donald Trump vowed to slash US drug prices by up to 80%. Trump’s proposed executive order would impose a “most favoured nation” policy, capping US drug prices at the lowest rates available globally.

Shares in Samsung Biologics, SK Biopharmaceuticals, and BeiGene dropped 4%, 2.5%, and 7.9%, respectively, while Sun Pharma led losses in India, falling over 5%. The pharmaceutical industry, which has historically opposed such measures, warned the move could stifle innovation and undermine research funding. Trump dismissed these claims, signaling a tough stance against industry lobbying. The announcement echoes prior efforts during his presidency, which were blocked by legal and political resistance.

Investment Insight

Trump’s renewed focus on drug pricing could heighten regulatory risk for pharmaceutical stocks, particularly those with significant US exposure. Investors should monitor developments closely, as the proposed “most favoured nation” policy may pressure margins and disrupt global pricing strategies. Diversification into healthcare sectors less reliant on drug pricing, such as medical devices or diagnostics, could provide a strategic hedge.

Pakistani, Indian Stocks Surge Amid Ceasefire Optimism

Markets in Pakistan and India rallied sharply after a ceasefire agreement over the weekend eased geopolitical tensions. Pakistan’s KSE-30 Index soared 9.2%, triggering a brief trading halt, while India’s NSE Nifty 50 Index climbed 3%.

Investors are pivoting back to economic fundamentals, with India’s growth prospects buoyed by anticipated US trade deals and potential rate cuts, while Pakistan eyes IMF funding and domestic reforms. The Indian rupee gained 0.9% offshore, and volatility gauges eased, signaling a positive shift in sentiment. However, lingering doubts over the truce’s durability could temper gains, as reports of violations surfaced shortly after the agreement.

Investment Insight

The ceasefire offers a tactical opportunity for investors to capitalize on renewed momentum in South Asian markets. In India, sectors tied to domestic growth, such as financials and infrastructure, stand to benefit from foreign inflows and improving liquidity. For Pakistan, IMF disbursements and structural reforms could support a medium-term recovery, particularly in undervalued equities. Caution is warranted, however, as geopolitical risks remain a potential overhang.