Global stocks, dollar jump, gold falls on hope of easing US-China tariff standoff
Major stock indexes rallied, the dollar gained against the euro and other currencies while safe-haven gold dropped on Wednesday as investors grew optimistic about a possible de-escalation in the trade war between the US and China.
A source familiar with the matter said US President Donald Trump’s administration would look at lowering tariffs on imported Chinese goods pending talks with Beijing.
The source’s comments followed a Wall Street Journal report, citing people familiar with the matter, that the White House is considering cutting its tariffs on Chinese imports in a bid to defuse economically damaging tensions with Beijing.
Adding to the upbeat tone, Trump late on Tuesday backed off from threats to fire Federal Reserve Chair Jerome Powell.
“There seems to be some light at the end of the tunnel here in terms of the trade war,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Trump’s multi-front tariff war has roiled markets in recent weeks, while his criticism of Powell in recent days has added to investor worries about US assets.
Some earnings news in the US and elsewhere also buoyed stocks on Wednesday. Boeing shares were up 5.9% after the company reported a smaller-than-expected quarterly loss.
The Dow Jones Industrial Average rose 685.41 points, or 1.76%, to 39,877.68; the S&P 500 rose 113.44 points, or 2.16%, to 5,401.20; and the Nasdaq Composite rose 500.27 points, or 3.07%, to 16,800.68.
MSCI’s gauge of stocks around the world rose 14.64 points, or 1.84%, to 810.90. The pan-European STOXX 600 index rose 1.67%.
After hitting record highs in recent session, spot gold was last down 3.09% at $3,276.93 an ounce. The euro was last down 0.36% against the dollar at $1.1379. Against the Japanese yen, the dollar strengthened 0.49% to 142.28.
US Treasury yields declined after the US administration’s signal of a potential respite in the US-China trade war and Trump’s softening stance on Powell.
Investors have been worried that White House pressure to cut interest rates would risk fuelling inflation just as Trump’s tariffs jack up prices.
The yield on benchmark U.S. 10-year notes fell 5.3 basis points to 4.336%, from 4.389% late on Tuesday.
Oil was lower. US crude fell 2.97% to $61.78 a barrel.
Indian benchmarch indices extended the winning run to seventh day on Wednesday with benchmark BSE Sensex jumping 520 points to close above 80,000 level for the first time in four months driven by strong gains in IT and auto shares.
The 30-share Sensex rose by 520.90 points or 0.65 per cent to settle at 80,116.49, the highest closing level since December 18. During the day, it surged 658.96 points or 0.82 per cent to 80,254.55. The NSE Nifty rallied 161.70 points or 0.67 per cent to 24,328.95.
Foreign fund inflows and positive global trends also boosted the market sentiment, analysts said.
Among the Sensex firms, HCL Tech surged the most by 7.72 per cent after the firm posted an 8.1 per cent increase in consolidated net profit at Rs 4,307 crore for March quarter 2024-25, mainly on account of large deals with a total contract value of about Rs 25,500 crore.
Tech Mahindra, Tata Motors, Infosys, Mahindra & Mahindra, Tata Consultancy Services, Tata Steel, Bharti Airtel and Maruti were also among major gainers.
Banking shares witnessed a sell-off after recent sharp gains with leading private lender HDFC Bank dropping by 1.98 per cent to emerge as the biggest loser among Sensex shares.
Kotak Mahindra Bank, State Bank of India, Axis Bank, ITC and UltraTech Cement were also among the laggards.
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