A Look at the Day Ahead in European and Global Markets

By Kevin Buckland

Listening to President Trump on Tuesday, it seems the vitriol towards Fed boss Jay Powell – the threats and name-calling – was a misunderstanding. Trump now claims he had “no intention of firing him” and was simply angling for a rate cut or two.

In the same news conference, Trump mentioned that the exorbitant tariffs on Chinese goods, which escalated rapidly following a tit-for-tat trade war, would soon be “substantially” lower.

Market reactions were immediate; investors rushed back into the dollar after days of heavy selling — dubbed the “sell America” trade — that pushed the currency to multi-year lows against the euro and Swiss franc. There was also a scramble back into Wall Street stocks, lifting share markets around Asia and likely buoying Europe too.

With just a week until Trump completes the symbolic 100th day of his second term, it seems market players are still grappling with his sudden pivots and abrupt changes.

Many analysts speculate that Treasury Secretary Scott Bessent intervened again to explain how disruptive any interference with an independent central bank could be, particularly during the Treasury market meltdown earlier this month that necessitated a reprieve from “Liberation Day” tariffs.

Analysts insist that concrete trade agreements must be reached before any real market stability returns. The Trump administration is lining up Japan for the first round of negotiations, which could set a precedent for other trading partners. A source informed Reuters that the two sides are moving closer to an interim agreement, although thornier issues are being postponed.

Bessent endorsed Trump’s statement that a de-escalation with China is likely but noted that future negotiations would be “a slog,” as both sides haven’t even agreed to start discussions yet.

Today, at least, the winds of change appear to be favouring the markets. Additionally, investors welcomed another shift in the Trump administration: Tesla (NASDAQ:TSLA) and SpaceX CEO Elon Musk announced he would significantly cut back on his work at DOGE to concentrate on his companies. Tesla shares spiked 5.5% after-hours, though it’s only a small recovery from nearly a 50% drop since December’s peak.

Key Developments That Could Influence Markets on Wednesday:

• Flash PMIs from the UK, Germany, France
• Euro zone trade balance
• Fed Governor Waller, St Louis Fed President Musalem, Cleveland Fed President Hammack, and Chicago Fed President Goolsbee to speak
• IMF/World Bank meetings continue in Washington
• BoE chief economist Pill speaks at Leeds University Business School

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