Global markets, gold, bitcoin and currencies - How have they reacted after Trump's declaration to reduce tariffs on China?!
Global markets reversed course after U.S. President Donald Trump's change of tone on both China and Federal Reserve Chairman Jerome Powell. Stocks recovered, the U.S. dollar strengthened and gold prices retreated as investor sentiment improved.
Speaking at the White House on Tuesday, President Trump said tariffs on China would be reduced “substantially,” although “they won’t be zero.” His comments echoed earlier remarks by Treasury Secretary Scott Bessent, who said the high tariffs were not sustainable and that a de-escalation in the U.S.-China trade war was expected.
In a separate Oval Office meeting, Trump told reporters that he had "no intention" of firing Fed Chairman Jerome Powell. "I would like to see him be a little more proactive in his idea of lowering interest rates," Trump said. "This is a perfect time to lower interest rates." The comments marked a significant toning down from his previous post on Truth Social, in which he labeled Powell "Mr. Too Late, a Big Loser."
Trump's remarks followed Monday's sharp sell-off on Wall Street, a slide in the U.S. dollar and a plunge in U.S. Treasuries as investors continued to flee U.S. assets. Despite Tuesday's rebound, analysts remained skeptical that the rally could be sustained.
Stock increase
U.S. futures rose after Trump's comments, with the Dow up 1.13%, the S&P 500 up 1.51%, and the Nasdaq Composite up 1.76%. Stocks across Asia also joined the broader rally on hopes of a de-escalation in the U.S.-China trade war. As of 5:38 a.m. CEST, Hong Kong's Hang Seng Index was up 2.4%, Japan's Nikkei 225 was up 1.91%, South Korea's Kospi was up 1.54%, and Australia's ASX 200 was up 1.41%.
US dollar and government bonds recover
In currency markets, the US dollar index rose more than 1% to 99.25, recovering from a three-year low of just above 98. Haven currencies such as the euro, Swiss franc and Japanese yen weakened against the greenback. Notably, the EUR/USD pair fell below 1.14 during the Asian session on Wednesday, retreating from above 1.15 a day earlier when the euro hit its highest level since November 2021.
U.S. government bonds also staged a relief rally, particularly among longer-dated Treasuries. The 10-year and 30-year Treasury yields rose 5 and 8 basis points, to 4.35% and 4.8%, respectively. Bond prices move inversely to yields. The rate-sensitive two-year Treasury yield rose 6 basis points to 3.8% as markets priced in a slower pace of rate cuts.
Gold retreats as Bitcoin rises
Gold prices fell sharply as safe-haven demand eased. The precious metal may also be overbought, prompting potential profit-taking by investors. Comex gold futures fell from $3,510 an ounce to $3,355 an ounce as of 6:07 a.m. CEST. Spot gold also fell more than 4% from Monday's high, falling to $3,343 an ounce.
In contrast, Bitcoin rose, rising 6.25% in the past 24 hours to trade above $93,400 (€82,000) as of 6:20 a.m. CEST. The leading cryptocurrency has remained above $84,000 (€73,000) over the past week, showing notable resilience despite a sharp sell-off in US tech stocks.
European markets will grow
Futures markets pointed to a higher open across Europe, driven by risk sentiment. The Euro Stoxx 50 rose 1.73%, Germany's DAX jumped 2.49%, and the UK's FTSE 100 gained 1.1%. Investors will be closely monitoring the upcoming manufacturing and services purchasing managers' indices (PMIs), due out later today.
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