Global financial markets roared back to life on Tuesday after U.S. President Donald Trump signaled plans to “substantially” reduce tariffs on Chinese imports and walked back threats to dismiss Federal Reserve Chair Jerome Powell. The remarks sparked a wave of optimism, reversing Monday’s sell-off and injecting fresh momentum into equities, currencies, and cryptocurrencies.
Trump’s Tariff Pivot Eases Trade War Fears
Speaking at the White House, Trump confirmed plans to slash tariffs on Chinese goods, though he clarified they “won’t be zero.” The announcement followed Treasury Secretary Scott Bessent’s earlier statement that high tariffs were “unsustainable,” hinting at a potential de-escalation in the protracted U.S.-China trade war. Investors welcomed the shift, which could ease costs for businesses and consumers amid lingering inflation concerns.
Key Quote:
“This is about fairness and balance. We’re making progress,” Trump said, without specifying a timeline for the tariff reductions.
Fed Chair Powell Retains Position as Trump Softens Tone
In a notable reversal, Trump expressed confidence in Fed Chair Jerome Powell, stating he had “no intention” of removing him despite earlier criticism. The president urged the Fed to “be more active” in cutting interest rates, calling the current economic climate “a perfect time” for monetary easing. This marked a stark contrast to his recent social media post labeling Powell “Mr. Too Late, a major loser.”
Market Rebound: Stocks, Dollar, and Bonds Rally
Equities:
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U.S. Futures: Dow Jones (+1.13%), S&P 500 (+1.51%), and Nasdaq (+1.76%) surged.
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Asian Markets: Hong Kong’s Hang Seng (+2.4%), Japan’s Nikkei (+1.91%), and Australia’s ASX 200 (+1.41%) rallied on trade war relief.
Currencies & Bonds:
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The U.S. dollar index jumped 1% to 99.25, retreating from a three-year low.
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Treasury yields climbed, with the 10-year note rising to 4.35% as investors scaled back bets on aggressive rate cuts.
Analyst Insight:
“Markets are breathing a sigh of relief, but uncertainty remains,” said Michael Brown of Pepperstone. “The dollar’s haven status and trade tensions are still wild cards.”
Gold Retreats as Bitcoin Defies Risk-Off Trend
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Gold: Prices plummeted 4% from record highs, with spot gold trading at $3,343/ounce as safe-haven demand waned.
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Bitcoin: Defied the pullback, soaring 6.25% to $93,400 (€82,000), bolstered by institutional inflows and technical resilience.
European Markets Poised for Gains
Futures pointed to a strong open in Europe, with the Euro Stoxx 50 (+1.73%), Germany’s DAX (+2.49%), and the UK’s FTSE 100 (+1.1%) all climbing. Investors awaited preliminary PMI data to gauge the health of Eurozone manufacturing and services sectors.
Conclusion: Cautious Optimism Prevails
While Trump’s tariff pivot and Fed détente fueled a global rally, analysts warned the recovery could be fragile. Persistent trade uncertainties, inflationary pressures, and geopolitical risks loom large. For now, markets bask in the reprieve—but the road ahead hinges on concrete policy actions, not just rhetoric.