London (AFP) – 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 and spark a crisis of confidence in the world’s top economy.
However, Trump tempered those fears on Tuesday, saying: “I have no intention of firing him.” “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 two percent on Tuesday, jumped again at the start of trading on Wednesday, with the tech-heavy Nasdaq shooting up 3.5 percent. “‘Buy America’ is back in action,” said Briefing.com analyst Patrick O’Hare, noting that the actions of the Trump administration would determine if that remained the case.
European stock markets also rallied, with Frankfurt and Paris gaining more than two percent while London advanced around one percent. Meanwhile, data showed that business activity in the eurozone remained “broadly unchanged” in April 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.
Further comments by Trump 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, while Beijing has replied with 125 percent duties on imports from the United States. But 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.
Gold, which had hit a record high above $3,500 Tuesday on a rush to safety, retreated to around $3,300 an ounce, while the 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 including Alibaba and Tencent, and Tokyo’s stock market also gained. Taipei jumped more than four percent, helped by a seven percent surge in chip titan TSMC.
In company news, shares in Tesla jumped 5.5 percent after Elon Musk said he would significantly scale back his Trump administration work to focus on the electric vehicle maker, which reported a 71 percent drop in first-quarter profits.
– Key figures at 1330 GMT –
New York – Dow: UP 1.9 percent at 39,940.24 points
New York – S&P 500: UP 2.5 percent at 5,421.23
New York – Nasdaq Composite: UP 3.5 percent at 16,871.26
London – FTSE 100: UP 0.9 percent at 8,399.33
Paris – CAC 40: UP 2.2 percent at 7,468.81
Frankfurt – DAX: UP 2.4 percent at 21,800.98
Tokyo – Nikkei 225: UP 1.9 percent at 34,868.63 (close)
Hong Kong – Hang Seng Index: UP 2.4 percent at 22,072.62 (close)
Shanghai – Composite: DOWN 0.1 percent at 3,296.36 (close)
Euro/dollar: DOWN at $1.1398 from $1.1420 on Tuesday
Pound/dollar: DOWN $1.3307 at $1.3330
Dollar/yen: UP at 141.91 yen from 141.56 yen
Euro/pound: UP at 85.68 pence from 85.67 pence
Brent North Sea Crude: DOWN 0.8 percent at $66.88 per barrel
West Texas Intermediate: DOWN 0.8 percent at $63.16 per barrel
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© 2024 AFP
