by Anand Krishnamoorthy and John Viljoen
US equity futures signaled a rebound from sharp declines on Monday spurred by concerns over President Donald Trump’s latest criticism of the Federal Reserve and the outlook for the American economy.
Contracts for the S&P 500 and the Nasdaq 100 gained 1% after the underlying gauges slumped more than 2% in Monday’s session. An index of the dollar’s strength steadied after weakening to a 15-month low as Trump warned the US economy may slow if the Fed does not move to immediately reduce interest rates.
Europe’s Stoxx 600 index dropped as traders returned from the Easter break. Novo Nordisk A/S slumped almost 10% after a pill from rival Eli Lilly & Co. helped patients shed weight and control blood sugar about as well as Novo’s injected blockbuster Ozempic.
While there were some signs of recovery in demand for riskier assets, the volatile backdrop to markets drew investors to havens. Gold surged to a fresh record just above $3,500 an ounce, while the yen strengthened beyond 140 per dollar for the first time since September.
Investors are wading through the latest headlines on global tariff talks after Trump imposed the highest levies in a century this month. Concerns he may be preparing to fire Fed Chair Jerome Powell have added to unease for traders, who this week are looking ahead to earnings from Tesla Inc. and Alphabet Inc. for clues on how companies are navigating this new environment.
Trump’s policies and his broadsides against the Fed have forced a reappraisal of the assets fundamental to US economic dominance. The dollar and Treasuries, traditional havens at times of stress, are looking less appealing.
“With increasing rhetoric from the administration admonishing the Fed to cut rates and the markets entertaining intensifying discussions about the possibility of replacing the Fed chair, we don’t expect a rush back into the market from abroad,” John Velis, a strategist at Bank of New York Mellon, said of US bonds. “The haven status of such assets is increasingly in question.”
Treasuries were steady after tumbling Monday, while the dollar was mixed against its Group-of-10 peers. The yen outperformed, with the Bank of Japan said to be on course to keep raising rates. Meanwhile, China let the yuan weaken against almost all major currencies to support its economy as the trade war with the US deepens.
“Market volatility though is driving some haven flow into the yen,” said Shoki Omori, chief desk strategist at Mizuho Securities Co. in Tokyo. “Reports the BOJ sees little need to change their stance on rate hikes are also aiding sentiment in the currency, while denting the dollar.”
In a sign that nations are attempting to navigate the tussle between the US and China, a high-level Japanese delegation will deliver a letter from Prime Minister Shigeru Ishiba to Chinese leader Xi Jinping this week. Beijing earlier warned nations against making agreements with Washington that hurt China.
The US said it’s made “significant progress” toward a bilateral trade deal following talks between Vice President JD Vance and Indian Prime Minister Narendra Modi on Monday. Thailand, which is seeking a reprieve from Trump’s plan to levy a 36% tariff on its goods, said ministerial level talks previously scheduled for this week have been delayed.
“Optimism appears to be fading, with markets potentially beginning to price for a less favorable outcome” in tariff talks, wrote Jun Rong Yeap, market strategist at IG Asia. “Talks are likely to drag on for longer.”
Some of the main moves in markets:
This story was produced with the assistance of Bloomberg Automation.
Copyright Bloomberg News
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