Market Insights

Dollar and Stocks Recover in Asia After Trump's Fed Comments

Mellissa · 23 Apr 202598.5K Views

Image Credit: MSN

Stock markets in Asia saw a welcome rebound on Wednesday after President Donald Trump reassured investors by confirming he had no intention of firing Federal Reserve Chair Jerome Powell and suggested the possibility of reduced tariffs on China.

The dollar surged across the board following Trump's comments, which had earlier unsettled investors by threatening Powell's position. Trump also reiterated his desire for a trade deal with China, hinting at significantly lower tariffs but emphasized he would set the terms if Beijing did not engage in talks.

On Tuesday, Treasury Secretary Scott Bessent mentioned that he anticipated a de-escalation in U.S.-China trade tensions, though negotiations were still in early stages and would be challenging.

Chris Weston, head of research at broker Pepperstone, noted the shift in market sentiment, with investors reacting to Trump's abrupt changes in stance. As a result, markets started buying back into undervalued stocks, pushing Japan’s Nikkei up by 2.3% and South Korea's index 1.2% higher. MSCI’s Asia-Pacific index outside Japan rose 0.3%, while U.S. stock futures saw a jump with S&P 500 futures up 1.8% and Nasdaq futures climbing 2.0%. Positive earnings reports also contributed to the bounce, with Tesla even rebounding 5% despite missing its forecasts.

The dollar gained 0.8% against the Japanese yen, rising to 142.72, and strengthened 0.8% against the Swiss franc to 0.8262. The euro dipped 0.6% to $1.1348. U.S. Treasury yields also saw movement, with longer-dated bonds rallying as Trump’s shift in stance helped ease concerns over U.S. monetary and fiscal policy. Yields on 30-year bonds fell, while shorter-term yields rose, leading to a flattening of the yield curve.

Despite the positive shift, concerns remain over tariffs, which the IMF warned could drag down global economic growth, slashing its forecasts for the U.S., China, and other countries.

Oil prices also recovered some losses, with Brent crude rising 67 cents to $68.09 per barrel and U.S. crude adding 64 cents to $64.31 per barrel. Meanwhile, gold, a traditional safe-haven asset, saw profit-taking and fell 0.8% to $3,353 an ounce, retreating from its all-time high of $3,500.