Asian stocks cautious as US data clouds Fed path

Asian chip-related stocks and some pharmaceutical companies fell after President Donald Trump said he will announce tariffs on the sectors “within the next week or so.”

Asian shares traded in a narrow range as weak US services data fueled uncertainty over the Federal Reserve’s policy path, while shares of chipmakers and pharmaceutical companies declined on tariff threats.

Japanese shares rose while South Korean stocks dropped. The broader MSCI Asia Pacific Index was little changed. Asian chip-related stocks and some pharmaceutical companies fell after President Donald Trump said he will announce tariffs on the sectors “within the next week or so.”

Treasuries edged lower with the yield on the 10-year gaining almost one basis point to 4.22%. Oil edged up after four consecutive days of declines while a gauge of the dollar was steady. US equity-index futures slipped.

The S&P 500 was on the brink of all-time highs on Tuesday, before losing steam. The pullback in stocks highlighted investor anxiety over the Fed’s next move, with economic data complicating the central bank’s balancing act between controlling inflation and sustaining growth. Stocks had rallied Monday amid growing bets on potential rate cuts after weak jobs data last week.

“We expect further choppy trading to persist in the later stages of summer, especially as the path of interest-rate policy remains unknown and highly sensitive to incoming economic data,” said Chris Senyek at Wolfe Research.

The US services sector effectively stagnated in July as firms — faced with tepid demand and rising costs — reduced headcount. The data, released Tuesday, painted a picture of a sluggish service economy wrestling with the fallout of higher tariffs, cautious consumers and uncertainty stemming from Trump’s policies.

Data out last week showed weaker-than-expected jobs data while inflation-adjusted consumer spending barely rose.

“Traders are continuing to speculate on the time of the Fed’s next rate cuts with sticky inflation signs weighed against weakening economic indicators,” said Fawad Razaqzada at City Index and Forex.com.

He also noted the S&P 500 outlook could start to deteriorate in the near-term amid warnings over sky-high valuations against a backdrop of weakening economy.

Asian chip-related stocks declined after a stream of negative news, including a Taiwanese probe into an alleged theft of Taiwan Semiconductor Manufacturing Co.’s trade secrets. Shares of the chipmaker fell 1.7% Wednesday.

Also, Advanced Micro Devices Inc. warned that its access to the crucial China market remains uncertain. Super Micro Computer Inc. tumbled after its results missed expectations.

In other tariff news, Trump said he was “getting very close to a deal” with Beijing. Trump also suggested he would impose increased tariffs on additional countries buying energy from Russia — including China — after saying earlier Tuesday that he would raise levies on Indian exports within 24 hours.

India is racing to contain the economic fallout from Trump’s threatened tariffs, which has left officials in New Delhi feeling shocked, jilted and unsure of how to respond. Indian shares and the currency fell Tuesday ahead of the central bank’s rate decision later Wednesday.

In other tariff news, Swiss President Karin Keller-Sutter arrived in Washington to make a last-minute bid for a deal to lower the 39% tariff imposed last week. The trip is to “facilitate meetings with the US authorities at short notice and hold talks,” the government said in a statement.