Global Markets Recover as Trump Eases Fears on Fed and Trade War
President Donald Trump has alleviated investor anxiety by stating he had “no intention” of firing Federal Reserve Chairman, Jerome Powell, quelling speculation that had battered global markets earlier in the week.
The markets, already reeling from the ongoing trade war with China, had been spooked by Trump’s previous comments questioning Powell’s leadership and suggesting he might remove him for not cutting interest rates. Such a move would have dealt a severe blow to the Fed’s independence and sparked a crisis of confidence in the US economy.
However, Trump’s unequivocal statement provided a much-needed shot of relief to investors. “I would like to see him be a little more active in terms of his idea to lower interest rates — it’s a perfect time to lower interest rates,” Trump said. “If he doesn’t, is it the end? No.”
The president’s comments on the trade war with China also indicated a more conciliatory approach. Trump acknowledged that the US levies were at a “very high” level and would “come down substantially.” Treasury Secretary Scott Bessent’s expectation of a de-escalation in the tariff standoff soon further bolstered investor confidence.
Global markets responded positively to the news. Hong Kong’s Hang Seng Index surged 2.4%, while Tokyo’s Nikkei 225 jumped 1.9%. Other Asian markets, including Seoul, Sydney, and Singapore, also advanced. In Europe, London’s FTSE 100 rose 1.4%, and the Euro Stoxx 50 gained 1.2%.
The dollar clawed back some of its recent losses against the pound, euro, and yen, while gold retreated from its record high above $3,500. Oil prices were boosted by more than 1%, having taken a recent hit from fears over the economic fallout from the tariff standoff.
Despite the International Monetary Fund’s decision to slash its global economic growth outlook, investors welcomed the developments from Washington. As Chris Weston at Pepperstone noted, “The mood in the market is evidently shifting, and what was a strong ‘sell America’ vibe flowing through markets as in part reversed.”
