Global markets rallied yesterday after Donald Trump retreated from his attacks on China and the US Federal Reserve chair Jerome Powell.
London’s FTSE 100 index of blue-chip stocks closed 0.9 per cent higher last night, while Germany’s Dax was up 3.1 per cent and the CAC 40 in Paris jumped 2.1 per cent.
Wall Street indices rose too – the S&P 500 by 1.7 per cent, the Dow Jones Industrial Average by 1.1 per cent and the Nasdaq by 2.5 per cent – adding to steep gains they made on Tuesday.
The dollar, which was recently trading at three-year lows on fears over the US economy sparked by Trump’s trade war, was up around 0.2 per cent against a basket of currencies.
And US government borrowing costs eased as bond yields, which have spiked during the turmoil, fell.
Meanwhile, gold, a safe-haven asset that rallied during the uncertainty, dipped by 2.6 per cent after reaching an all-time high above $3,500 per ounce earlier in the week.
Backing down: US President Donald Trump sent markets into a tailspin with his plans to slap drastic tariffs on trading partners
It comes after Trump sent markets into a tailspin with his plans to slap drastic tariffs on trading partners.
Investors were given a partial reprieve when the US president caved in to calls for a 90-day pause for most countries.
But an escalating trade war between the White House and Beijing continued to fuel anxiety, with the US imposing a 145 per cent duty on Chinese goods and China responding with a 125 per cent levy on American imports.
And Trump’s threats to sack US central bank chair Powell further spooked markets.
However, the mood began to improve on Tuesday when US Treasury Secretary Scott Bessent said that there will be a ‘de-escalation’ in the trade war.
And yesterday Bessent offered further soothing comments, saying ‘America First does not mean America alone’.
He told bankers in Washington that ‘there is an opportunity for a big deal here’ on tensions between the US and China.
Meanwhile, Trump said he had ‘no intention’ of sacking Powell despite previously saying his exit ‘could not come fast enough’ after the central bank paused interest rate cuts.
Share prices of some of the US stock market’s biggest names leapt higher yesterday, with chipmaker Nvidia up 3.9 per cent, Apple adding 2.4 per cent and Amazon climbing 4.3 per cent.
Tesla jumped 5.4 per cent despite a dismal report on Tuesday that showed profits tumbled 71 per cent in the first quarter.
It came after boss Elon Musk told investors he would spend less time on his government role as a key adviser to Trump and more time leading the electric car manufacturer.
Alicia Garcia Herrero, the chief Asia Pacific economist at French bank Natixis, said: ‘Trump is panicking due to markets plummeting and still very high US Treasury yields. He needs a deal and quick. China does not need to offer anything big in such circumstances.’
Russ Mould, the investment director at AJ Bell, said: ‘Thesecomments have given markets a sense of optimism that recent chaos might have peaked and we’re heading towards calmer waters.
‘It almost suggests that someone has taken Trump to one side and told him it’s time to be more responsible with his words and actions.’
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