Don’t Worry Fed – Asia Market Wrap

Stocks jumped and the dollar edged up as the Trump administration defused some of the tension that had rattled financial markets in recent sessions.

A gauge of die dollar advanced for a second day and Treasuries rose after President Donald Trump said he doesn’t plan to fire Federal Reserve Chair Jerome Powell. Asian shares gained along with equity- index futures for Europe and the US as optimism grew about tariff discussions with India and Japan and a de-escalation of trade tensions with China. Tesla Inc. shares rose in after hours as Chief Executive Officer Elon Musk said he will step back “significantly” from die Department of Government Efficiency.

Trump’s comments on the Fed chief late Tuesday is a walk back from opinions expressed in the past week that sparked concerns about the US central bank’s independence, and reinforced a ‘Sell America’ trade. Signs of progress in some trade talks also helped improve market sentiment with Trump and Treasury Secretary Scott Bessent saying that a standoff with China will ease.

On Tuesday, Trump said he had no intention of firing Powell despite his frustration with the Fed not moving more quickly to slash interest rates.

While Trump backing off on Powell and progress in tariff negotiations alleviated some immediate worries, it doesn’t fix concerns about how the levies will impact inflation and put the US economy into a recession. Also, China hasn’t yet officially responded to Trump administration’s latest comments on trade talks.