Stocks swung and a dollar rally lost steam on Thursday as investors tried to sift through the noise coming from the Trump administration, its erratic stance on tariffs and the Federal Reserve leadership.
Just this week, U.S. President Donald Trump launched a blistering attack on Fed Chairman Jerome Powell before backing off his call for the chairman to resign, and despite much coverage of tariffs on China, investors were left in the dark about the final outcome.
The Wall Street Journal reported earlier that the White House was considering reducing tariffs on Chinese imports, and a source told Reuters on Wednesday that the Trump administration would consider reducing tariffs on Chinese imports after negotiations with Beijing.
But Treasury Secretary Scott Bessant later said such a move would not be taken unilaterally, echoing comments from White House spokeswoman Carolyn Levitt.
“I don’t think you ever get used to the haphazardness and erraticism that we’ve seen. It’s just extreme,” said Tony Sycamore, market analyst at IG. “I think that’s Trump — he wants to try to find the right levers, and I think he’s not afraid to try and pull back if he fails.”
Stocks rose on Wednesday, boosted by hopes of easing trade tensions between the United States and China, with MSCI’s broadest index of Asia-Pacific shares outside Japan falling 0.17%, bucking Wall Street’s trend.
U.S. futures were steady, with Nasdaq and S&P 500 futures each up about 0.2%. EUROSTOXX 50 futures edged up 0.16%.
Japan’s Nikkei rose 0.86%.
The Trump administration told Japan’s trade delegation that it cannot be given special treatment for its tariff measures in response to Tokyo’s strong call for a review during ministerial talks this month, NHK reported Thursday.
Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, said: “The short-term volatility is quite extreme right now… This high volatility will continue and the volatility in the future will be higher because the basic rules of the game are changing… The economic world order is changing.”
“I think it’s clear that we have passed the peak of globalization and all this free flow of trade and capital is not going to be a stable state,” Ahmed said on the sidelines of the IMAS Investment Conference and 2025 Masterclass in Singapore.
The dollar retreated on Thursday after a rebound this week on Trump’s change of stance and firing Powell as investor confidence in U.S. assets remained fragile.
The dollar fell 0.15% against the yen to 143.24. The euro rose 0.15% against the dollar to $1.1331; the Swiss franc rose about 0.2% against the dollar to 0.8294 Swiss francs.
Longer-term U.S. Treasury yields stabilized as Trump’s shift in policy on Powell appeared to ease threats to the U.S. monetary and fiscal credibility, with the 30-year Treasury yield essentially flat at 4.3675%. [US/]
The benchmark 10-year yield fell about 2 basis points to 4.3675%.
Cleveland Federal Reserve Bank President Beth Hammack said on Wednesday that huge uncertainty in the outlook continues to prompt the central bank to slow monetary policy to see how the economy performs.
The market expects a slight rate cut of more than 80 basis points in December.
Elsewhere, oil prices stabilized after falling in the previous session on news that OPEC+ will consider accelerating oil production increases in June.
Brent crude futures rose 0.2% to $66.26 a barrel, while U.S. crude futures also rose 0.18% to $62.38 a barrel.
Gold prices resumed their rally, approaching all-time highs, and were last up 1.2% at $3,329.03 an ounce. [GOL/]
