SYDNEY/LONDON, April 23 – Worldwide financial markets breathed a sigh of relief on Wednesday as President Donald Trump dialed back his earlier critical remarks about Federal Reserve Chairman Jerome Powell. The clarification brought a wave of calm to investors who had been shaken by the previous day’s rhetoric.
Trump Retreats from Fed Dismissal Talk
In a shift from his earlier tone, Trump assured reporters he had no intention of removing Fed Chair Jerome Powell, quelling fears of political interference in monetary policy. His initial threats had unsettled investors, prompting selloffs in U.S. assets and pushing traders toward safer options. However, the president’s softer stance appears to have halted the downward spiral, restoring some investor confidence.
This policy reversal came alongside Trump’s fresh remarks about U.S-China trade relations. He stated that he aimed for a more balanced deal with China and emphasized that any future agreement would feature significantly lower tariffs than previously rumored figures of up to 145%.
Market Reaction: Stocks Rally
European stocks responded positively. The STOXX 600 (.STOXX) index climbed 1.7%, boosted not only by Trump’s backpedaling but also by strong corporate earnings. Among the top performers were German tech firm SAP and BE Semiconductor, a key supplier to the semiconductor industry.
Meanwhile, U.S. stock futures jumped by 2.5%, signaling a potential rally when Wall Street reopens. Analysts pointed to a growing sense of resilience in the markets as traders become more accustomed to Trump’s unpredictable style.
“Markets are increasingly adjusting to these kinds of political head-fakes,” said Chris Weston, head of research at a global brokerage firm. “The shock factor is wearing off, and investors are learning to navigate the noise.”
Tesla Leads the Charge on Strong Earnings
Investor sentiment was also buoyed by upbeat quarterly earnings from several companies. Notably, Tesla (TSLA.O) saw its stock surge 7% in pre-market activity despite falling short of earnings expectations. CEO Elon Musk reassured investors on a call, stating he would be stepping back from his role at the Department of Government Efficiency to dedicate more attention to his business ventures.
The move was seen as a positive signal for Tesla’s future, reinforcing investor belief in Musk’s commitment to the company’s growth.
Dollar Gains, Then Pauses
The U.S. dollar initially rallied strongly, gaining as much as 1.1% against the Japanese yen. The yen, a traditional safe haven during times of uncertainty, had been heavily favored during the turbulence of the previous 48 hours. As markets stabilized, the dollar eased back, holding a modest gain of 0.2% to settle around 141.98 yen.
In currency markets, the euro dipped 0.2% to $1.139, while the British pound also slipped 0.2%, trading at $1.331. The dollar’s brief strength reflected a short-term rebalancing rather than a fundamental change in outlook.
Bonds Reflect Calm, but Caution Lingers
Long-term U.S. Treasury yields declined, indicating a pullback in risk aversion. Yields on 30-year bonds dropped by 14 basis points to 4.74%, while shorter two-year yields nudged up by 3 basis points to 3.82%. This suggested that investors were less concerned about immediate interest rate cuts but remained watchful of long-term economic signals.
Analysts observed that even with the current sense of stability, underlying uncertainty remains present. “We’re likely to see continued volatility,” said Mohit Kumar, a market strategist at an investment firm. “Traders should stay cautious and look to gradually build positions in more stable markets like Europe and Asia. Flexibility and long-term perspective are key in this environment.”
Tariffs and Growth Fears
Though Trump’s remarks hinted at lower future tariffs, concerns remain about the broader impact of trade disputes. Recent economic forecasts have shown a dampening effect on global growth, with slower momentum expected in major economies like the U.S. and China.
The International Monetary Fund has lowered its economic growth forecasts for both nations, pointing to ongoing trade disputes and uncertain policy directions as key reasons. Despite Trump’s softened stance, the damage from earlier policies continues to weigh on investor sentiment.
Oil and Gold React to Shifting Sentiment
Energy markets rebounded modestly as the overall risk appetite improved. Brent crude climbed 0.8%, bringing its price to $67.96 a barrel. The uptick followed sharp declines earlier in the week due to global demand concerns and supply-side uncertainties.
Conversely, gold—a traditional safe-haven asset—faced some selling pressure as investors took profits. The precious metal fell 1.3% to $3,335 an ounce, retreating from a record high of $3,500. The dip signaled renewed confidence in riskier assets, at least in the short term.
Conclusion
While Trump’s reversal on Powell and softened tone on tariffs have brought temporary stability to the markets, investors remain wary. The broader concerns over inflation, economic slowdown, and unpredictable policy moves continue to cast a shadow. For now, traders are treading carefully, with a renewed focus on earnings, fundamentals, and global data trends.