April 23, 2025 — Global equity markets staged a sharp rebound on Wednesday as investors welcomed a de-escalation in tensions between the Trump administration and the Federal Reserve, coupled with signs of progress in key international trade negotiations.
Stock indexes across Asia, Europe, and U.S. futures all advanced, while the dollar climbed for a second consecutive session and long-dated Treasuries rallied. Investors found relief after former President Donald Trump confirmed he has no plans to fire Federal Reserve Chair Jerome Powell—a dramatic reversal from recent social media posts criticizing the Fed’s rate stance.
Trump Retreats From Fed Confrontation
Trump’s latest statement—that he doesn’t intend to dismiss Powell despite frustrations over interest rates—has calmed concerns that political pressure could compromise the central bank’s independence. His earlier threat of firing Powell had sent shockwaves through markets, triggering a selloff in U.S. assets and pushing the dollar to its lowest point since December 2023.
“While the mood is cautiously optimistic, the distrust hasn’t vanished,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities. “Trump’s calming words may ease immediate concerns, but his volatility keeps markets on edge.”
The market reaction was swift: the dollar gained further ground, Treasuries rose—especially on the long end of the yield curve—and haven assets like gold and the yen pulled back.
Easing Trade Tensions Fuel Market Optimism
Adding to the improving sentiment, Trump hinted at a more conciliatory approach toward China, stating that the final tariff levels would be “nowhere near” the punitive 145% mark and vowing to be “very nice” in ongoing trade discussions. The U.S. also cited “significant progress” in negotiations with India and positive developments with other partners, including Japan, South Korea, and Australia.
“We’re starting to see stronger trade dialogues emerge across several key regions,” said Stuart Kaiser, head of equity trading strategy at Citigroup. “This is what markets were waiting for—real signs that tensions are thawing.”
Asian equities were quick to recover, with benchmarks in India, South Korea, and Australia all reclaiming losses incurred since Trump’s sweeping tariff announcement on April 2. European equities followed suit, and U.S. futures signaled a positive open.
Tech & Corporate Highlights: Tesla Rallies
Tesla Inc. led U.S. tech movers in after-hours trading, rising 4.6% after CEO Elon Musk pledged to significantly scale back his involvement in the Department of Government Efficiency (DOGE) and refocus on Tesla’s core mission. Though the EV maker missed profit and revenue expectations, the commitment from Musk helped restore investor confidence.
Meanwhile, European corporate news added further support. SAP SE posted stronger-than-expected Q1 profits, and Danone SA beat forecasts for quarterly sales. Volvo AB, however, saw a decline in income, tempering some of the enthusiasm.
Macro Risks Still Loom
Despite the rebound, market analysts warned that the broader risks remain unresolved. The International Monetary Fund (IMF) downgraded global growth forecasts for both 2025 and 2026, citing uncertainty tied to tariffs and inflationary pressures. The IMF also warned that prolonged trade friction could deepen economic slowdowns in both developed and emerging markets.
“Short-term optimism shouldn’t overshadow the underlying concerns,” said Chris Weston of Pepperstone Group. “Rate uncertainty, geopolitical volatility, and trade fragmentation are still in play.”
Bond Market, Bitcoin, and Volatility Signals
In the bond market, investor appetite for U.S. debt remained strong, particularly in long-dated Treasuries, as participants awaited key auctions to gauge foreign demand. The options market reflected lingering caution, with premiums for downside protection on long-term bonds hitting levels not seen since the 2021 “flash crash.”
Meanwhile, Bitcoin surged past $90,000, breaking a multi-week pattern of sideways movement and reigniting investor enthusiasm in digital assets. The rally was interpreted by some analysts as a sign of capital rotating back into high-risk, high-reward segments of the market.
Takeaway: A mix of political clarity from Trump, signs of easing trade tensions, and strong corporate updates have lifted markets into a relief rally. However, with global growth forecasts dimming and distrust in policy consistency persisting, the rebound could be fragile. Investors are advised to remain vigilant.
