Trump's comments revive Asian markets
Asian stock markets finally caught a break on Wednesday thanks to a series of encouraging remarks from President Donald Trump. The US leader dispelled concerns over a potential dismissal of Fed Chair Jerome Powell and at the same time signaled his readiness for a softer tone in trade negotiations with China.
USD soars as Trump softens stance
The US dollar jumped sharply after Trump made it clear that Powell's job is secure. The move was interpreted as a signal of stability, immediately boosting the dollar's standing on the global stage. However, by the end of the trading day, some of that investor enthusiasm had begun to fade.
China deal: "On my terms or not at all"
Trump reiterated his interest in a trade deal with Beijing, noting that he is ready to make an offer provided China is willing to come to the table. At the same time, he hinted that if China does not take the initiative, Washington will set the rules unilaterally. The prospect of 145% tariffs is now off the table, a development that investors took as a positive signal.
Asia in the green: Nikkei and Kospi climb
On this backdrop, investors flocked back to previously oversold assets. Japan's Nikkei gained 1.7%, South Korea's Kospi rose 1.4%, and the broader MSCI Asia Pacific ex-Japan Index advanced 1.9%.
Wall Street continues its rebound: futures edge higher
US exchanges are riding a wave of optimism: S&P 500 futures gained 1.4%, while Nasdaq futures advanced 1.7%. Strong corporate earnings reports further lifted sentiment. Even Tesla, despite subdued guidance, surprised the market—its shares jumped 5% after the investor call.
Musk steps out of the the spotlight: billionaire promises to focus on business
An unexpected surge in Tesla stock was partly driven by comments from Elon Musk himself. During a call with analysts, the company's CEO announced his plans to scale back his involvement with the government's Department of Efficiency next month. According to Musk, his top priority is now his portfolio of business projects. The market interpreted this as a signal that Musk would be taking a more hands-on approach in his businesses.
USD rebounds after sell-off
The US dollar partially clawed back recent losses. The yen-dollar exchange rate rose 0.2% to 141.77, up from the recent low of 139.89, as the greenback continued to recover following a 1.1% spike. The dollar also strengthened against the Swiss franc, rising 0.4% to 0.8218, while the euro slipped 0.2% to $1.1399.
Rates in question: market rethinks expectations
Concerns about excessive pressure on the Federal Reserve from the White House have begun to ease. Investors, who had previously bet on a more aggressive policy pivot, are now recalibrating their expectations.
Fed funds futures declined, with the expected rate cut by year-end narrowing to 81 basis points. This suggests that market participants are beginning to question the pace and magnitude of monetary policy easing that has occurred to date.
IMF sounds alarm: trade wars drag down economic growth
Despite a wave of optimism sweeping through global markets, underlying problems remain unresolved. On Tuesday, the International Monetary Fund painted a somber picture: due to persistent trade barriers, growth rates for the world's largest economies—the United States, China, and most others—have come in below earlier forecasts. Tariffs continue to weigh on global economic activity, eroding investor confidence and dampening business momentum.
Oil regains lost ground
Still, rising risk appetite gave the oil market a boost. On Tuesday, oil prices managed to claw back some earlier losses, rising about 0.9%.
The upward trend continued into Wednesday morning. Brent crude added 60 cents to reach $68.04 a barrel, while US WTI followed suit, also rising 60 cents to $64.27. The market is responding to a revival in sentiment, even as global economic uncertainty lingers.
Gold loses luster as investors lock in profits
While equities and oil picked up steam, gold, a classic safe haven in times of turmoil, moved in the opposite direction. Investors chose to lock in profits amid the risk-on rally. As a result, the precious metal slid 1.2% to $3,340 an ounce. This pullback followed a record surge to $3,500 and served as a reminder of just how volatile safe-haven assets can be.
Tech giant fuels European market rally
European stock exchanges opened firmly higher on Wednesday. A strong quarterly report from SAP, the region's largest software company, provided a powerful tailwind.
The pan-European STOXX 600 rose 1.8% as of 07:03 GMT. National benchmarks joined the rally, with Germany's DAX, France's CAC 40, Spain's IBEX, and the UK's FTSE posting gains ranging from 1.9% to 2.7%.
SAP ignites rally: quarterly report stuns Wall Street
One of the main stars of the European session was German technology powerhouse SAP. Its shares soared an impressive 9.3% following the release of its first-quarter financial results. The company delivered operating profit well above analysts' expectations, breathing new life into the European tech sector. As a result, the industry index (.SX8P) jumped 3.3%, marking the best performance among all regional sectors.
Trump's trade rhetoric softens
Adding an extra dose of positivity to the markets, Donald Trump unexpectedly struck a diplomatic tone towards China. Speaking to reporters, the US president stated his intention to negotiate with Beijing in a very polite manner. This came as a welcome surprise after his recent threats and harsh rhetoric, fueling investors' appetite for risk.
Volvo under pressure: forecasts downgraded
Not all the news was positive. Swedish auto giant Volvo reported a significant drop in first-quarter profit, which came in below forecasts. The company also downgraded its outlook for North American truck demand. The market reacted swiftly, with Volvo shares falling 2.2%, making it one of the day's rare underperformers.
BP in focus: Elliott demands change
Elsewhere in the energy sector, British oil major BP found itself in focus after activist fund Elliott raised its stake in the company to more than 5%. BP shares climbed 3.8% on the news. The fund has been pressing the energy giant to boost efficiency and achieve a sharp increase in free cash flow to $20 billion by 2027. The announcement served as a strong catalyst for renewed interest in the stock.
