Trump’s Policy Shifts Keep Markets on Edge After Brief Rebound
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Stocks were largely stagnant on Thursday as investors struggled to make sense of conflicting signals from the Trump administration and the Federal Reserve's leadership. Earlier this week, President Donald Trump criticized Federal Reserve Chair Jerome Powell, then later retracted calls for his resignation. The uncertainty surrounding U.S.-China tariffs added to the confusion, with mixed messages about potential tariff reductions.
Reports surfaced on Wednesday suggesting that the Trump administration might lower tariffs on Chinese goods depending on the outcome of talks with Beijing. However, Treasury Secretary Scott Bessent clarified that such a move wouldn't happen unilaterally, reinforcing earlier statements from White House spokesperson Karoline Leavitt.
Tony Sycamore, a market analyst at IG, remarked on the unpredictable nature of the situation, noting that Trump is willing to experiment with various strategies, even if it means backtracking if things don’t work out. Meanwhile, stocks in Asia, represented by the MSCI index, dropped by 0.17%, diverging from the positive sentiment in the U.S. stock market, which had risen the previous day on hopes of easing trade tensions between China and the U.S.
U.S. futures remained steady, with Nasdaq and S&P 500 futures both up by about 0.2%. European markets showed modest gains, with EUROSTOXX 50 futures up by 0.16%. Japan's Nikkei index rose 0.86%.
The Trump administration also rejected Japan’s request for special treatment on tariffs during negotiations, further contributing to the uncertainty. Salman Ahmed, from Fidelity International, warned that extreme short-term volatility could persist as the global economic landscape shifts, noting that the era of globalization is likely over.
The U.S. dollar lost some momentum on Thursday after a recent rebound, driven by optimism following Trump's reversal on Powell. The dollar dipped 0.15% against the yen to 143.24 and saw slight gains against the euro and Swiss franc. U.S. Treasury yields were stable, with the 30-year yield holding at 4.37%.
Federal Reserve Bank of Cleveland President Beth Hammack emphasized the ongoing uncertainty about the economic outlook, suggesting that the Fed may adopt a cautious approach to monetary policy. Markets are now anticipating slight rate cuts by December.
In commodities, oil prices steadied following a previous decline, with Brent crude rising 0.2% to $66.26 a barrel and U.S. crude gaining 0.18%. Gold prices continued their upward trend, nearing a record high, with the metal gaining 1.2% to $3,329.03 an ounce.
Paraphrasing text from "Reuters" all rights reserved by the original author
