Global stock markets and the dollar have rallied on hopes of two significant climbdowns by the Trump administration on issues blamed for a slump in values.
Remarks by the US Treasury secretary on punitive tariffs against China lifted the mood on Wall Street initially before the president himself moved to calm market trade war worries and also end speculation he could fire the head of the country’s central bank.
The Dow Jones Industrial Average and tech-focused Nasdaq Composite both ended Tuesday trading 2.7% up, erasing losses of the previous day.
Asian markets later followed that lead, with the Hang Seng in Hong Kong gaining 2.4%.
European indices also saw a strong opening, with the FTSE 100 up by more than 1.2%. It was led higher by Asia-focused banks HSBC and Standard Chartered.
US futures suggested Wall Street would pick up where it left off, with further strong gains expected.
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The US dollar – badly hit by trade war implications in recent weeks – was at least a cent higher than a day earlier against many rival currencies including the pound.
The rally gathered steam on Tuesday evening when US Treasury secretary Scott Bessent told a private JPMorgan event that he expected a “de-escalation” in the spiralling spat with China.
It’s a fight that has seen US tariffs hit 145% and China responding with duties of 125%.
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Trump: Tariffs are making US ‘rich’
According to a transcript obtained by the Associated Press news agency, he told the audience: “Neither side thinks the status quo is sustainable”, but he added that peace talks were yet to start in earnest and could take time to bear fruit.
His boss later struck a similar tone in remarks to reporters when he said the final tariff rate with China would come down “substantially” from the current 145%.
“It won’t be that high, not going to be that high,” Mr Trump said, adding: “We’re doing fine with China… we’re going to live together very happily and ideally work together.”
He gave no hint that he plans to ease wider tariffs on trading partners, including the UK which is currently subject to 25% tariffs on car, steel and aluminium imports and a wider 10% “baseline” tariff.
But the president did row back on an apparent threat, made last week, to sack the chair of the Federal Reserve Jerome Powell in revenge for the US central bank holding off on interest rate cuts that could provide some stimulus to the tariff-hit economy.
Mr Powell has said the Trump administration’s protectionist policies have created uncertainty over growth and the threat of higher inflation.
The president has dismissed those arguments but told reporters: “I have no intention of firing him”.
Image: Federal Reserve chair Jerome Powell was nominated for the role by Donald Trump in 2017. File pic: AP
His comments were widely seen as an attempt to calm financial market concerns that the independence of the country’s central bank was under threat.
Analysts cautioned there was a long way to go to recover values seen before the start of the trade war, with the Nasdaq remaining almost 16% down in the year to date alone.
US government borrowing costs also remain elevated.
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What IMF said about the UK economy
Not helping sentiment were big downgrades to global growth forecasts by the International Monetary Fund on Tuesday.
Michael Brown, senior research strategist at Pepperstone, said of the investor mood: “Participants understandably remain jittery, not only as the haven value of both Treasuries and the USD (US dollar) continue to be called into question, but also as a huge degree of trade uncertainty continues to linger.
“As a reminder, the whole concept of ’90 deals in 90 days’ is currently running at ‘0 deals in 14 days’ which, to be frank, doesn’t quite have the same ring to it.”
It is much more than a battle over vaccines in the United States.
It has become a proxy war about trust, freedom, and the role of government in public health.
The debate about childhood immunisations, once a matter of bipartisan consensus, is now a defining clash between federal government, state leadership and the medical community.
At the centre of it is the federal government’s sharp policy shift under US health secretary Robert F Kennedy Jr.
He has rolled back vaccine recommendations and reshaped advisory committees with sceptics.
States have responded along ideological lines – Florida planning to abolish all vaccine mandates; California, Oregon, and Washington forming a “Health Alliance” to safeguard them.
The western states felt they had to act when the head of the agency tasked with disease prevention was sacked.
Image: Robert F. Kennedy Jr appears before the Senate Finance Committee on Thursday. Pic: AP
Image: Senator Elizabeth Warren speaks at the hearing. Pic: AP
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Is US politics fuelling a deadly measles outbreak?
Jab mandates compared to ‘slavery’
Several senior figures at the Centers for Disease Control and Prevention have resigned since Susan Monarez was removed.
The turmoil in public health has led to a fragmented system where Americans’ access to vaccines and the rules governing them, largely depend on where they live.
Likening vaccine mandates to “slavery”, Florida’s surgeon general Joseph Ladapo said the government had no right to dictate them.
“Your body is a gift from God. What you put into your body is because of your relationship with your body and your God,” he said.
It is a tug of war between collective responsibility or individual choice and one that will redefine public health in this nation.
Donald Trump is to rebrand the US Department of Defense as the “Department of War”, according to the White House.
The president will today sign an executive order allowing it to be used as a secondary title for the US government’s biggest organisation.
It also means defence secretary Pete Hegseth will be able to refer to himself as the “secretary of war” in official communications and ceremonies.
Image: Mr Hegseth could refer to himself as ‘secretary of war’ under the change. Pic: Reuters
Mr Hegseth posted the words “DEPARTMENT OF WAR” on X on Thursday night.
Permanently renaming the department would need congressional approval, but the White House said the executive order will instruct Mr Hegseth to begin the process.
The Department of Defense – often referred to colloquially as the Pentagon due to the shape of its Washington HQ – was called the War Department until 1949.
Historians say the name was changed to show the US was focussed on preventing conflict following the Second World War and the dawning of the nuclear age.
Mr Trump raised the possibility of a change in June, when he suggested it was originally renamed to be “politically correct”.
Image: The department is often just referred to as the Pentagon. Pic: Reuters
His reversion to the more combative title could cost tens of millions, with letterheads and building signs in the US and at military bases around the world potentially needing a refresh.
Joe Biden’s effort to rename nine army bases honouring the Confederacy and Confederate leaders, set to cost $39m (£29m), was reversed by Mr Hegseth earlier this year.
Opponents have already criticised Mr Trump’s move.
“Why not put this money toward supporting military families or toward employing diplomats that help prevent conflicts from starting in the first place?” said Democratic senator Tammy Duckworth, a member of the armed services committee.
Mr Trump’s other federal renaming orders include controversially labelling the Gulf of Mexico the “Gulf Of America”and reverting North America’s tallest mountain, Denali in Alaska, to its former name of Mount McKinley.
The Mexican government and Alaska’s Republican senators both rejected the changes.
For so long, the Epstein story has cast them in a cameo role.
Everyday coverage of the scandal churns through the politics and process of it all, reducing their suffering to a passing reference.
Not anymore.
Not on a morning when they gathered on Capitol Hill, survivors of Epstein‘s abuse, strengthened by shared experience and a resolve to address it.
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Epstein survivors call for release of all files
In a news conference that lasted over an hour, they brought an authenticity that only they could.
There was vivid recollection of the abuse they endured and a certainty in the justice they seek.
They had the safety of each other – adults now, with the horrors of youth at a distance, though never far away.
It was an emotional gathering on Capitol Hill, attended by survivors, politicians and several hundred members of the public who turned up in support.
Banners read “Release the files”, “Listen to the victims” and “Even your MAGA base demands Epstein files”.
Image: Haley Robson was one of several Epstein survivors who spoke. Pic: AP
A startling spectacle
That last statement isn’t lost on Donald Trump. As if for emphasis, one of the speakers was the ultra-loyal House representative Marjorie Taylor Greene – they don’t make them more MAGA.
In a spectacle, startling to politics-watchers in this town, she stood side by side with Democrat congressmen to demand the Epstein files be released.
It reflects a discontent spread through Donald Trump’s support base.
He is the man who once counted Jeffrey Epstein as a friend and who has said he’d release the files, only to reverse course.