Trade war: Stock markets rally as Trump rows back on Fed and China threats
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.
Money latest: Are Treasury-backed savings now the best place for your cash?
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.
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%.
Please use Chrome browser for a more accessible video player
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”.
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.
Please use Chrome browser for a more accessible video player
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.”
Children are among the fatalities in a mass shooting at a child’s birthday party in California.
Police said four people had died and 10 were wounded in the incident in Stockton, about 60 miles east of San Francisco.
Officers were called on Saturday to a banquet hall just before 6pm local time (2am UK time) and district attorney Ron Freitas said children were among the dead.
He said the attacker was still at large.
First responders walk through a parking lot near the scene of a mass shooting in Stockton, California. Pics: AP
“We can confirm at this time that approximately 14 individuals were struck by gunfire, and four victims have been confirmed deceased,” San Joaquin County Sheriff’s Office said on X.
The post said early indications suggest it could be a “targeted incident” but that information remains limited.
Police have so far not disclosed the attacker’s identity and the motive is unclear.
Stockton’s vice mayor Jason Lee confirmed on Facebook that the shooting on Lucile Avenue happened at a child’s birthday party.
Pics: AP
Mayor Christina Fugazzi also said that “families should be together instead of at the hospital, standing next to their loved one, praying that they survive”.
California governor Gavin Newsom’s office added that he had been briefed on the “horrific shooting”.
Venezuela has accused Donald Trump of a “colonial threat” after he said the airspace “above and surrounding” the country should be considered closed “in its entirety”.
Mr Trump made the declaration amid growing tensions with President Maduro – and as the US continues attacking boats it claims are carrying drugs from Venezuela.
He wrote on Truth Social: “To all Airlines, Pilots, Drug Dealers, and Human Traffickers, please consider THE AIRSPACE ABOVE AND SURROUNDING VENEZUELA TO BE CLOSED IN ITS ENTIRETY.”
Air traffic above Venezuela on Saturday afternoon. Pic: FlightRadar24
Venezuela’s foreign affairs office called it a “colonial threat” and “illegal, and unjustified aggression”.
It accused the president of threatening “the sovereignty of the national airspace… and the full sovereignty of the Venezuelan state”.
President Trump’s words were part of a “permanent policy of aggression against our country” that breached international law and the UN Charter, it added.
The Pentagon and the White House have so far not given any additional detail on the president’s statement.
Mr Trump’s post comes after the American aviation regulator last week warned of a “potentially hazardous situation” over Venezuela due to a “worsening security situation”.
Nicolas Maduro is widely considered a dictator by the West. Pic: Reuters
The South American nation revoked operating rights for six major airlines that went on to suspend flights to the country.
Mr Trump warned a few days ago that land operations against suspected Venezuelan drug traffickers would begin “very soon”.
Such a move would be a major escalation in Operation Southern Spear – the US naval deployment in the Caribbean Sea and eastern Pacific that’s so far attacked at least 21 vessels.
Please use Chrome browser for a more accessible video player
Three killed as US strikes another alleged drug boat
Venezuela has said the attacks, which have killed more than 80 people, amount to murder.
The US has released videos of boats being targeted, but hasn’t provided evidence – such as photos of their cargo – to support the smuggling claims.
Read more:
Trump may have another motive in war on drugs
The US-Venezuela crisis explained
Please use Chrome browser for a more accessible video player
Venezuela claims Trump creating ‘fables’ to justify ‘war’
The Pentagon has sought to justify the strikes by labelling the drug gangs as “foreign terrorist organisations” – putting them on par with the likes of al Qaeda.
It claims the boats targeted are carrying drugs bound for the US, although Sky’s chief correspondent says the final destination is likely to be Europe and West Africa.
President Maduro has denied Mr Trump’s claims he is involved in the drugs trade himself and said his counterpart wants to oust him so he can install a more sympathetic government.
Venezuelan officials have also claimed Mr Trump’s true motivation is access to the country’s plentiful oil reserves.
Mr Maduro is widely considered a dictator who’s cheated elections and has been president since 2013.
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024