Global markets rallied sharply on Tuesday after U.S. President Donald Trump signaled a potential softening in trade tensions with China and moderated his stance on Federal Reserve Chair Jerome Powell. The shift in tone drove a broad-based risk-on rally, lifting equities, strengthening the U.S. dollar, and pushing safe-haven assets like gold lower.
Speaking at the White House, Trump said tariffs on Chinese goods could be reduced “substantially,” though not entirely eliminated. The comments reinforced earlier signals from Treasury Secretary Scott Bessent, who acknowledged that the current tariff regime was unsustainable and hinted at progress in trade negotiations.
In a separate Oval Office session, Trump also dialed back criticism of Fed Chair Powell, stating he had “no intention” of removing him and calling for more aggressive rate cuts. “This is a perfect time to lower interest rates,” the president said—marking a notable departure from his recent attacks, including a social media post branding Powell as “Mr Too Late.”
The remarks followed a turbulent start to the week that saw Wall Street suffer steep losses and the dollar hit a three-year low amid mounting investor anxiety. While Tuesday’s rally provided some relief, analysts warned that uncertainty around trade policy and monetary direction remains a key overhang.
“Participants understandably remain jittery… as the haven value of both Treasuries and the USD continues to be called into question,” said Michael Brown, senior strategist at Pepperstone, in a client note.
Markets Surge Across the Board
U.S. stock futures surged after Trump’s comments, with the Dow Jones Industrial Average up 1.13%, the S&P 500 climbing 1.51%, and the Nasdaq Composite jumping 1.76%. Asian equities followed suit: Hong Kong’s Hang Seng Index rose 2.4%, Japan’s Nikkei 225 advanced 1.91%, South Korea’s Kospi gained 1.54%, and Australia’s ASX 200 added 1.41%.
In Europe, futures pointed to a higher open, with the Euro Stoxx 50 up 1.73%, Germany’s DAX jumping 2.49%, and the UK’s FTSE 100 gaining 1.1% ahead of key PMI data due later today.
Dollar Recovers, Treasury Yields Rebound
The U.S. dollar staged a strong comeback, with the dollar index rising over 1% to 99.25. The euro, yen, and Swiss franc all weakened in response. The EUR/USD pair slipped below 1.14 during early Wednesday trading, retreating from recent highs above 1.15.
U.S. Treasury yields also climbed, led by long-dated maturities. The 10-year yield rose 5 basis points to 4.35%, while the 30-year yield gained 8 basis points to 4.8%. The two-year yield, sensitive to interest rate expectations, increased 6 basis points to 3.8% as markets adjusted expectations for Fed policy.
Gold Retreats, Bitcoin Extends Rally
Gold prices fell sharply amid reduced demand for haven assets and potential profit-taking after a recent rally. Comex gold futures dropped from $3,510 to $3,355 per ounce, while spot gold slid over 4% to $3,343—retreating from Monday’s all-time highs.
In contrast, Bitcoin continued its upward trajectory, jumping 6.25% in the last 24 hours to trade above $93,400 (€82,000). The cryptocurrency has remained resilient, consistently trading above $84,000 (€73,000) despite recent volatility in broader markets.
As investors digest Trump’s shifting tone and await further clarity on trade and monetary policy, the rebound underscores just how sensitive markets remain to Washington’s signals.
