Trump not planning to fire Powell, market tension eases

by John Viljoen and Julien Ponthus

Stocks jumped and bonds rose as relief swept across global markets after the Trump administration defused some of the tension that has rattled investors.

Europe’s Stoxx 600 index rose 1.9% after President Donald Trump said he doesn’t plan to fire Federal Reserve Chair Jerome Powell. Growing optimism of easing US-China trade tensions further boosted the mood. 

US stocks were set to extend Tuesday’s strong rally, with S&P 500 contracts climbing 2%. Tesla Inc. shares rose about 6% in premarket trading as Chief Executive Officer Elon Musk said he will pull back from his work with the US government. Stocks in Asia advanced.

Treasuries gained, pushing the benchmark 10-year yield five basis points lower to 4.35%. A gauge of dollar strength steadied. Bitcoin stormed above $90,000 for the first time since early March. Gold fell as demand for havens cooled. 

Trump’s comments on the Fed chief late Tuesday are a walk back from opinions expressed in the past week that sparked concerns about the US central bank’s independence. On the trade front, Trump and Treasury Secretary Scott Bessent said that a standoff with China can be de-escalated.

“If one is optimistic, one can take the view that Trump is slowly backing down on trade and on firing Powell,” said Gillles Guibout, head of European equities at AXA IM. “But he has a structural tendancy to create uncertainty and now there’s a real defiance among international investors, and that’s palpable in the dollar.”

It’s also a busy day for earnings, with shares in SAP SE soaring the most in six years after first-quarter profit at Europe’s most valuable company topped analyst estimates. Reckitt Benckiser Plc dropped after reporting lackluster sales growth.

Trump said Tuesday he had no intention of firing Powell, despite his frustration with the Fed not moving more quickly to lower borrowing costs. The president posted on social media last week that Powell’s “termination cannot come fast enough!” His rebuke of the Fed and comments from officials that Trump was studying whether he could replace Powell had sent the dollar to the lowest level since December 2023.

On trade, Trump said he plans to be “very nice” to China in any talks and that tariffs will drop if the two countries can reach a deal, a sign he may be backing down from his tough stance on Beijing amid market volatility. The US president also said that final tariffs on China wouldn’t be “anywhere near” the 145% level set.

“It will come down substantially but it won’t be zero,” Trump said. “We’re going to be very nice and they’re going to be very nice, and we’ll see what happens.”

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 1.9% as of 9:24 a.m. London time
• S&P 500 futures rose 2%
• Nasdaq 100 futures rose 2.4%
• Futures on the Dow Jones Industrial Average rose 1.5%
• The MSCI Asia Pacific Index rose 1.8%
• The MSCI Emerging Markets Index rose 1.8%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.3% to $1.1389
• The Japanese yen fell 0.2% to 141.86 per dollar
• The offshore yuan rose 0.2% to 7.2976 per dollar
• The British pound fell 0.2% to $1.3302

Cryptocurrencies

• Bitcoin rose 3.4% to $94,302.12
• Ether rose 5.9% to $1,796.35

Bonds

• The yield on 10-year Treasuries declined five basis points to 4.35%
• Germany’s 10-year yield advanced four basis points to 2.48%
• Britain’s 10-year yield declined one basis point to 4.53%

Commodities

• Brent crude rose 1.2% to $68.26 a barrel
• Spot gold fell 1.9% to $3,315.64 an ounce

This story was produced with the assistance of Bloomberg Automation.

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