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Markets take stock of Trump’s U-turns and the relief rally is stuttering

Investors struggled to sort through the noise of the Trump administration, its erratic stance on tariffs, and the Federal Reserve leadership.

This week, U.S. president Donald Trump attacked Fed chair Jerome Powell. He then retracted his calls for his resignation. Investors were left in the dark about the final state of tariffs against China, despite the many headlines.

A source said on Wednesday that, in the event of talks with Beijing, the Trump administration may consider lowering tariffs for imported Chinese products. This follows a Wall Street Journal article that suggested the White House was considering reducing tariffs for Chinese imports.

Treasury Secretary Scott Bessent said later that such a step would not be taken unilaterally. He was echoing remarks made by White House spokesperson KarolineLeavitt.

I don't believe you'll ever be able to get used the flip-flopping and haphazard behavior we've seen. Tony Sycamore is a market analyst for IG. He said that it was extreme. "I think Trump is like that - he will try to find the levers he can pull. I don’t think he is afraid to try something and I do not think he’s afraid to walk it back if it fails."

MSCI's broadest Asia-Pacific index outside Japan dropped 0.4%, bucking Wall Street's trend after stocks rose on Wednesday amid hopes of a de-escalation in Sino-U.S. tensions.

U.S. Futures have pared their gains made earlier in the session. Nasdaq and S&P500 futures are down by 0.24%, respectively. EuroSTOXX futures only rose 0.08%.

The Nikkei gained 1%.

Two sources familiar with this matter confirmed on Thursday that Ryosei Acazawa, Japan's chief tariff negotiator, is finalizing plans to visit the United States in April to have a second round with his counterpart.

Hong Kong's Hang Seng Index fell 0.7%, while the CSI300 blue chip index in China rose 0.24%.

Salman Ahmed is the global head of strategic asset allocation and macro at Fidelity. He said: "Short-term volatilities are quite extreme. This high volatility will continue. You have elevated volatility moving forward because the fundamental rules of the game, the economic world, are changing."

Ahmed said this on the sidelines the IMAS Investment Conference 2025 and Masterclass in Singapore.

Investor confidence in U.S. asset prices remained fragile, and the dollar dropped on Thursday after a week of gains on Trump's U turn on firing Powell.

The dollar dropped 0.5% against the yen to 142.75. The euro rose 0.32%, to $1.1350. Meanwhile, the Swiss franc grew more than 0.3% at 0.82795 to dollar.

The 30-year yield was little changed, at 4.7980%. Trump's change of heart on Powell appeared to lessen the threat to U.S. fiscal and monetary credibility.

The benchmark 10-year rate was down by about 3 basis points, to 4.3578%.

Beth Hammack, President of the Federal Reserve Bank of Cleveland, said that on Wednesday there is still a lot of uncertainty about the future. She urged the central bank to be cautious in its monetary policy and to monitor the economy's performance.

The markets are predicting a rate cut of around 80 basis points by December.

Oil prices have stabilized in other markets after a drop in the previous session. Sources said that OPEC+ will consider accelerating their oil production increases in June.

Brent crude futures rose by 0.08%, to $66.17 per barrel. U.S. crude also increased 0.03%, to $62.29 a barrel.

Gold continued its march towards a new record high. The yellow metal rose 1.6% to $3,340.29 per ounce.

(source: Reuters)