Global markets continued to make gains on Wednesday, with US futures indicating another strong day of trading on Wall Street. Factors helping investor sentiment included President Donald Trump rowing back on comments about firing the Fed Chair Jerome Powell and signs of de-escalation in the trade war with China.
Markets reacted specifically to Trump’s suggestion of a “substantial” cut in China tariffs, backed up by Treasury secretary Scott Bessent saying the current regime, less than a month old, was “unsustainable”.
A rise in Tesla TSLA shares on Tuesday also helped, as Elon Musk appeared to refocus away from government toward running the electric vehicle company. Despite a fall in profits, the company’s shares gained 4.60% on Tuesday ahead of earnings and look set to rise 7% at the open on Wednesday.
In Europe, investors also looked for possible signs of progress on Ukraine-Russia peace deal as well as reacting to the positive momentum generated by Wall Street’s gains.
Defence stocks in Europe were the biggest losers, led by German bellwether stock Rheinmetall RHM, which fell 5%.
“The more conciliatory tone from the White House on trade talks is in line with our view that a worst-case scenario on tariffs can be avoided,” say analysts at Swiss bank UBS. They also say that earnings season has helped improve investor confidence.
“The stabilization in markets may also reflect that the ongoing first quarter earnings season is not turning out to be as bad as feared, even though the percentage of companies beating sales and earnings estimates has so far been below historical averages.”
Dollar Gains, Gold Falls
Gains in Asian indexes overnight helped set up a near 2% rise on the STOXX Europe 600 on Wednesday, while US futures indicated a rise of more than 2% on the S&P 500 index and nearly 3% on the Nasdaq composite index.
Among European stocks leading the gains, German software giant SAP rose nearly 10% after earnings and amid renewed investor enthusiasm for the wider technology sector.
In fixed-income markets, US bond yields softened as risk aversion waned, with the 10-year yield dipping to 4.29%, from 4.35% on Tuesday.
Currency markets saw the dollar make modest gains against the euro, with one dollar trading at EUR 0.88, from EUR 0.87 the day before.
Having hit a record high of $3,500 on Tuesday, gold retreated as investors embraced more risk and ditched safe-haven assets. The commodity was seen trading around $3,300 dollars.
