Asia breathes a sigh of relief as markets perk up after Trump's remarks
Asian stock markets finally got a break on Wednesday, thanks to a series of encouraging statements from Donald Trump. The US President dispelled fears that Fed Chairman Jerome Powell might be fired, while simultaneously demonstrating his willingness to adopt softer rhetoric in the trade dialogue with China.
Trump tones down, dollar soars
The US currency has strengthened sharply after Trump made it clear that Powell's seat is not wobbly under him. This step was perceived as a signal of stability, which immediately strengthened the dollar's position on the international stage. However, by the end of the trading day, investor enthusiasm began to fade.
China deal: "either the good way or my way"
The US President once again indicated his interest in a trade agreement with Beijing, noting that he was ready to offer conditions if the Chinese side agreed to negotiations. At the same time, he made it clear that if China did not take the initiative, Washington would determine the rules of the game on its own. There was no longer talk of possible duties of 145% - and investors perceived this as a positive sign.
Asia in the plus: Nikkei and Kospi went up
Against this background, investors rushed for previously sold assets. The Japanese Nikkei index added 1.7%, and the South Korean Kospi rose by 1.4%. The broader MSCI index of Asia-Pacific countries (excluding Japan) confidently rose by 1.9%.
Wall Street continues to recoup: futures are going up
American stock exchanges have caught up in the wave of optimism: futures on the S&P 500 added 1.4%, and on the Nasdaq - 1.7%. Strong reports on corporate profits also contributed to the strengthening of sentiment. Even Tesla, despite weak forecasts, surprised the markets: its shares jumped by 5% after a conference call with investors.
Musk retreats into the shadows: the billionaire promises to focus on business
The unexpected growth of Tesla shares was, in part, supported by the words of Elon Musk himself. During a conference call with analysts, the head of the company said that next month he intends to reduce his participation in the government Department of Efficiency. According to him, the priority is in his numerous business projects. The market took this statement as a signal that Musk will increase his operational participation in his companies.
The currency is recouping its positions: the dollar is strengthening after a fall
The American dollar partially compensated for recent losses. The yen rose 0.2% to 141.77, up from its recent low of 139.89 and continuing to recover from a 1.1% surge.
Amid this move, the dollar also strengthened against the Swiss franc, up 0.4% to 0.8218. Meanwhile, the euro weakened slightly, falling 0.2% to $1.1399.
Rates in question: Markets revise expectations
Concerns about excessive pressure on the Fed from the White House have begun to subside. Investors who had previously counted on more aggressive policy easing are now adjusting their expectations.
Fed funds futures have begun to decline, with the expected rate cut by the end of the year reduced to 81 basis points. This means that market participants are beginning to doubt the previous speed and scale of monetary policy easing.
IMF Sounds the Alarm: Trade Wars Are Slowing Down Economic Growth
Despite the wave of optimism in the markets, fundamental problems remain. The International Monetary Fund presented a gloomy picture on Tuesday: due to persistent trade barriers, the growth rates of the largest economies - the United States, China and most other countries - were lower than previously forecast. Trade duties continue to put pressure on global economic activity, undermining investor confidence and reducing business activity.
Black gold is regaining ground
Nevertheless, the growing risk appetite supported the oil market. On Tuesday, oil quotes managed to partially compensate for previous losses: growth amounted to about 0.9%.
On Wednesday morning, the dynamics continued. A barrel of Brent rose by 60 cents and reached $68.04. American WTI oil followed suit, strengthening by the same 60 cents - to $64.27 per barrel. The market is responding to a recovery in sentiment despite global economic uncertainty.
Gold Loses Shine as Investors Take Profits
While stocks and oil are gaining momentum, gold, a traditional haven in times of instability, has gone the other way. Investors have decided to take profits amid rising risk appetite. As a result, the precious metal has fallen 1.2% to $3,340 an ounce. The drop followed a record rise to $3,500 and was a reminder of the high volatility of safe-haven assets.
European Markets in the Green as Tech Giant Provides Support
European stock markets opened higher on Wednesday. A strong quarterly report from SAP, Europe's largest software maker, was a strong driver of growth.
The pan-European STOXX 600 index was up 1.8% by 07:03 GMT. National indices also did not stand aside: the German DAX, the French CAC 40, the Spanish IBEX and the British FTSE showed growth from 1.9% to 2.7%.
SAP explodes the market: quarterly report surprises Wall Street
One of the main heroes of the European session was the German technology corporation SAP. Its shares soared by an impressive 9.3% after the publication of financial results for the first quarter. The company showed an operating profit that significantly exceeded analysts' expectations. This breathed new life into the European tech sector - the industry index (.SX8P) jumped by 3.3%, showing the best result among all sectors in the region.
Trump changed his tone: trade rhetoric softens
An additional dose of positivity was added to the markets by Donald Trump, who suddenly showed diplomacy towards China. In a conversation with journalists, the US President said that he intends to negotiate with Beijing "very politely." This came as a pleasant surprise amid recent threats and harsh rhetoric, increasing investors' overall appetite for risk.
Volvo under pressure: forecasts worsen
Not all the news was positive. Swedish auto giant Volvo reported a significant drop in first-quarter profit, worse than expected. The company also lowered its forecast for truck demand in North America. The market reacted without hesitation, with Volvo shares falling 2.2%, becoming one of the few losers on the day.
BP in investors' crosshairs: Elliott demands change
On another front, in the energy sector, British oil major BP was in the spotlight after activist fund Elliott increased its stake in the company to more than 5%. Against this backdrop, BP shares rose 3.8%. The fund is demanding that the energy giant improve efficiency and significantly increase its free cash flow, to $20 billion by 2027. This statement became a powerful catalyst for interest in the company's securities.
