Global Market reversed the course following President Donald Trump’s tone change in both China and the Federal Reserve Chair Jerome Powell. Stocks recovered, gold prices receding as the US dollar strengthened and investors’ sentiment improved.
Speaking at the White House on Tuesday, President Trump said tariffs on China would fall “significantly” but “they are not zero.” His comments reiterated previous statements by Treasury Secretary Scott Bescent. He said high tariffs are not sustainable and are expected to emit US-China trade war.
At another oval office meeting, Trump told reporters he had no intention of firing Chairman Jerome Powell. “I hope he’ll be a little more proactive in terms of his idea of lowering interest rates,” Trump said. “This is the best time to cut interest rates.” These comments marked a significant softening from his previous post on the true social that he labeled Powell as “Mr Too Let, Major Loser.”
Trump’s remarks followed a sharp sale on Monday on Wall Street, a decline in the US Treasury as investors continued to flee from American assets. Despite Tuesday’s rebound, analysts remained skeptical about whether the rally could be maintained.
“Nottheless, participants are not only left with the value of both the Treasury and USD shelters continuing to be questioned, but also with the long-lasting uncertainty of large-scale trade.
Stock Rally
US stock futures jumped according to Trump’s comments, with the Dow rising 1.13%, the S&P 500 rising 1.51%, and the NASDAQ Composite rising 1.76%.
Stocks across Asia also participated in a wider rally on US-China hopes of de-escalation in the trade war. As of 5:38am, Hong Kong’s Hangsen index had increased by 2.4%, Japan’s Japan 225 had increased by 1.91%, Korea’s Cospi had increased by 1.54%, and Australia’s ASX 200 had increased by 1.41%.
US dollars and government bonds rebound
In the currency market, the US dollar index has skyrocketed from 1% to over 99.25, recovering from its three-year low, exceeding 98. Shelter currencies such as the euro, Swiss franc and Japanese Yen have weakened against the dollar. In particular, the EUR/USD pair fell below 1.14 during Wednesday’s Asian session, retreating from above 1.15 the day before the Euro reached its highest level since November 2021.
US government bonds also held relief rallies, particularly among the long-term Treasury departments. Treasury yields for 10 and 30 years reached 4.35% and 4.8%, respectively, up 5 years and 8 basis points. Bond prices move inversely to yield. Interest-rate-sensitive two-year Treasury yields rose by 6 basis points to 3.8% due to a slower rate of interest rate reductions.
Gold Retreat while Bitcoin is surged
Gold prices fell sharply as demand for havens eased. Precious metals may have also been bought, encouraging potential profits by investors. Comex Gold futures fell from $3,510 per ounce to $3,355 per ounce as of 6:07am. Spot Gold also fell to $3,343 per ounce, exceeding 4% from Monday’s all-time high.
By contrast, Bitcoin recovered, trading above $93,400 (82,000 Euros) at 6:20am, up 6.25% over the last 24 hours. Last week, major cryptocurrencies exceeded $84,000 (73,000 Euros).
European markets are expected to rise
The futures market has shown to be widespread open across Europe, supported by risk-on sentiment. The Euro Stoxx 50 rose 1.73%, Germany’s DAX increased by 2.49%, and the UK’s FTSE 100 rose 1.1%. Investors will closely monitor future manufacturing and service purchase manager index (PMI) scheduled for later today.
