[HONG KONG] Asian stocks rallied with Wall Street on Wednesday (Apr 23) after Donald Trump said he had “no intention” of firing the head of the Federal Reserve and that eye-watering tariffs on China would be slashed drastically.
Global markets, already upended by a trade war, were battered further at the start of the week by fears the US president was looking to remove central bank boss Jerome Powell for not cutting interest rates, calling him a “major loser” and “Mr Too Late”.
Observers warned such a move would have dealt a blow to the Fed’s independence and sparked a crisis of confidence in the world’s top economy, sparking a sell-off of US assets and another global crisis.
However, Trump looked to temper those fears Tuesday, saying: “I have no intention of firing him.”
He added: “I would like to see him be a little more active in terms of his idea to lower interest rates – it’s a perfect time to lower interest rates.
“If he doesn’t, is it the end? No.”
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The remarks gave a much-needed shot of relief to investors, helped by the president’s comments later indicating a more conciliatory approach to the trade war with China.
Washington has imposed tariffs of 145 per cent on a range of products from China, while Beijing has replied with 125 per cent duties on imports from the United States.
But the president on Tuesday acknowledged that the US levies were at a “very high” level, and that this will “come down substantially”.
“They will not be anywhere near that number,” he said, but added that “it won’t be zero”.
That came after Treasury Secretary Scott Bessent told a closed-door event in Washington that he expected a de-escalation soon in the United States’ tariff standoff with China, which he said was not sustainable.
White House Press Secretary Karoline Leavitt later said that “the president and the administration are setting the stage for a deal”, noting that “the ball is moving in the right direction”.
Investors welcomed the comments with open arms, pushing Tokyo, Hong Kong, Sydney, Seoul and Wellington more than one per cent higher, while Taipei rallied more than three per cent.
Singapore and Jakarta also rose though Shanghai and Manila edged down.
Gold, which had hit a record high above US$3,500 on Tuesday on a rush to safety, retreated to sit around US$3,370, while the dollar clawed back some of its recent losses against the pound, euro and yen.
The gains followed rallies of more than two per cent for all three main indexes in New York.
“While it is still early days, the mood in the market is evidently shifting and what was a strong ‘sell America’ vibe flowing through markets… has in part reversed,” said Chris Weston at Pepperstone.
He added that the president’s comments on Powell “should go some way to allaying fears of a major policy mistake”.
Investors were unmoved by the International Monetary Fund’s decision to slash its global economic growth outlook by 0.5 percentage points to 2.8 per cent this year, citing the effect of Trump’s tariff policies. AFP
