Global stocks rally as Trump soothes fears over China trade, Fed

Wall Street’s main equity indices, which had already gained more than 2 percent on Tuesday, jumped again on Wednesday.
(Photo by ANGELA WEISS / AFP)

LONDON, United Kingdom — A relief rally swept global equity markets Wednesday as comments by US President Donald Trump that he had “no intention” of firing the head of the Federal Reserve and his signals of possible tariff cuts for China reassured investors.

Global markets, already upended by Trump’s trade war, were hit at the start of the week by fears he was looking to remove central bank boss Jerome Powell for not cutting interest rates, calling him a “major loser” and “Mr. Too Late”.

Experts warned such a move would deal a blow to the Fed’s independence. It would also spark a crisis of confidence in the world’s top economy.

However, Trump tempered those fears on Tuesday. “I have no intention of firing him,” he said.

READ: Trump says he has ‘no intention’ of firing Federal Reserve chair

“These comments have given markets a sense of optimism that recent chaos might have peaked and we’re heading towards calmer waters,” said AJ Bell investment director, Russ Mould.

Wall Street’s main equity indices, which had already gained more than 2 percent on Tuesday, jumped again on Wednesday.

“‘Buy America’ is back in action,” said Briefing.com analyst Patrick O’Hare. He noted that the actions of the Trump administration would determine if that remained the case.

European stock markets also rallied, with Frankfurt gaining more than 3 percent.

Meanwhile, data showed that business activity in the eurozone remained “broadly unchanged” in April. This, as manufacturing held up in the face of US tariffs despite waning confidence for the year ahead.

In Britain, however, the purchasing managers’ index tumbled more than expected to a two-and-a-half-year low.

A more conciliatory approach

Further comments by Trump on Tuesday indicating a more conciliatory approach to the trade war with China added to the positive market sentiment.

Washington has imposed tariffs of 145 percent on a range of products from China. Meanwhile, Beijing has replied with 125-percent duties on imports from the United States.

Trump acknowledged that the US levies were at a “very high” level and that it would “come down substantially.”

That came after Treasury Secretary Scott Bessent told a closed-door event in Washington that he expected a de-escalation soon in the United States’ tariff standoff with China.

He confirmed on Wednesday, however, that trade talks with China were not currently underway. He ruled out a unilateral tariff cut by the United States.

Gold, which hit a record high above $3,500 Tuesday on a rush to safety, retreated to around $3,300 an ounce. The US dollar clawed back some of its recent losses against the pound, euro and yen.

“Looking at the dollar’s more muted reaction, you get the feeling that it is more of a reluctant view that Trump is slowly backing down on trade tariffs. It is actions that count,” said City Index and FOREX.com analyst Fawad Razaqzada.

In Asia, Hong Kong stocks surged on the back of a rally in tech firms. These included Alibaba and Tencent. Tokyo’s stock market also gained.

Taipei jumped more than 4 percent, helped by a 7-percent surge in chip titan TSMC.

In company news, shares in Tesla jumped around 8 percent. This was after Elon Musk said he would significantly scale back his Trump administration work to focus on the electric vehicle maker. Tesla reported a 71-percent drop in first-quarter profits.