By Alun John and Rae Wee
LONDON/SINGAPORE (Reuters) -Stocks drifted on Thursday and a rebound in the dollar lost traction as investors tried to sift through the noise from the Trump administration and its fickle stance on tariffs and the Federal Reserve’s leadership.
Over the last week, U.S. President Donald Trump rained attacks on Fed Chair Jerome Powell then retracted calls for his resignation, and left investors none the wiser on the ultimate state of tariffs on China despite many headlines.
The Trump administration would look at lowering tariffs on imported Chinese goods pending talks with Beijing, a source told Reuters on Wednesday.
Treasury Secretary Scott Bessent said high tariffs between the U.S. and China were not sustainable, but also said such a move would not come unilaterally, echoing comments from White House spokesperson Karoline Leavitt.
China’s commerce ministry said on Thursday the United States should lift all unilateral tariff measures against China if it “truly” wanted to solve the trade issue.
That all helped U.S. shares and the dollar to rally on Wednesday, but the moves faded in Thursday, with broad European and Asian share benchmarks each around 0.6% lower, and S&P 500 futures down 0.5%. [.EU]
The dollar was also weaker, off 0.6% on the Japanese yen and Swiss franc at 142.5 yen and 0.826 francs, while the euro gained 0.5% to $1.1375. [FRX/]
“Pantomime policies produce pantomime markets,” said analysts at Rabobank in a note.
“This has been fully evident in the oscillating price action in recent sessions with Trump’s ‘he’s behind you, oh no he isn’t!’ approach to governing not only prompting market reversals but even arguably resulting in the same driver provoking two diametrically-opposed reactions.”
Longer-dated Treasuries steadied as Trump’s reversal on Powell seemed to ease the threat to U.S. monetary and fiscal credibility, with the 10-year yield 3 basis points lower at 4.36%. [US/]
After a volatile period the benchmark is set for its third day in a row of fairly muted moves.
Markets are pricing in slightly more than 80 bps of rate cuts by December, though with the level of U.S. tariffs still uncertain, let alone their impact on economic growth and inflation, traders are bracing for further swings there.
Japan’s Nikkei was a rare outperformer, up 0.5%. Reuters reported tariff negotiator Ryosei Akazawa is making final arrangements to visit the United States from April 30 to hold a second round of talks with his counterpart.
In a surprise bit of positive economic news, German business morale unexpectedly rose in April, a survey showed on Thursday.
Earnings were also being released in the U.S. and Europe, and offered a mixed picture.
Gucci-parent Kering shares dropped 6% after reporting a bigger-than-expected decline in first quarter revenue.
Alphabet earnings are due late on Thursday, after U.S. close.
Elsewhere, oil prices steadied after a fall in the previous session as sources said OPEC+ would consider accelerating its oil output increases in June.
Brent crude futures rose 0.85% to $66.67 a barrel, while U.S. crude similarly rose 0.9% to $62.83 per barrel. [O/R/]
Gold was heading back towards Tuesday’s record high, last up 1.3% at $3,331.2 an ounce. [GOL/]
(Reporting by Rae Wee; Editing by Gerry Doyle, Jamie Freed and Kate Mayberry)
