After President Donald Trump hinted at lowering tariffs for China and stated he had no intentions to remove the chairman of the Federal Reserve, stock markets in Asia saw a much-needed relief surge on Wednesday. Following Trump’s retraction of his threats to fire Fed Chair Jerome Powell, which had severely damaged investor confidence in U.S. assets, the dollar surged across the board.
Additionally, Trump reaffirmed his desire to reach an agreement with China in which tariffs would not exceed 145%; nevertheless, he noted that if Beijing chose not to engage in negotiations, he would determine the parameters of the agreement.
Treasury Secretary Scott Bessent was quoted earlier on Tuesday as stating that he thinks trade tensions between the United States and China would de-escalate. Still, that talks with Beijing have not yet begun and will be a “slog. The market’s attitude is clearly changing, and yesterday’s strong’sell America’ sentiment has partially reversed, even if it is still early,” said Chris Weston, head of research at broker Pepperstone.
The president firing from the hip and then changing his position as if it were never a major concern is a habit that the markets are growing accustomed to. In the same way that Trump’s tariffs raise prices, investors have been concerned that pressure from the White House to lower interest rates will lead to increased inflation.
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