Readers can stay updated with free notifications by subscribing to the Equities myFT Digest, which is directly delivered to their inboxes.
Global stock markets experienced an upswing on Wednesday following an announcement by Donald Trump that he does not intend to remove Jay Powell from his position as Federal Reserve Chair. This statement alleviated concerns about the US central bank’s independence, which had unsettled markets earlier in the week.
Ahead of the opening in New York, S&P 500 futures increased by 2.3 percent, with gains also observed in US Treasuries and European equities. These developments built on a rebound seen on Tuesday in the Wall Street benchmark, which rose by 2.5 percent as Trump hinted at a potential reduction in trade tensions with Beijing, suggesting that tariffs on Chinese imports would be significantly lowered.
While the President reiterated his call for the Fed to reduce borrowing costs, he also clarified, “I don’t want to talk about that because I have no intention of firing [Powell].” According to Dario Perkins of consultancy TS Lombard, markets may appreciate Trump’s reluctant show of support, but the tension affecting the Fed’s independence remains. Perkins noted that Trump’s demand for rate cuts has complicated the Fed’s ability to act.
The Stoxx Europe 600 index increased by 1.7 percent on Wednesday morning, and Germany’s Dax index advanced with a 2.6 percent rise. Concurrently, the yield on the 10-year US Treasury fell by 0.06 percentage points to 4.33 percent, continuing a decline following sharp increases earlier in the month. Notably, bond yields and prices move inversely.
Meanwhile, the US dollar appreciated by 0.2 percent against a basket of major currencies; however, it continues to hover around multi-year lows after a more than an 8.5 percent drop this year. These recent developments occurred after a turbulent period in financial markets, where Trump’s tariff measures led to a steep decline in US equities and considerable volatility. The S&P 500 remains over 10 percent down for the year, despite the recent recovery, and the Nasdaq Composite index has fallen more than 15 percent since January, yet Nasdaq futures increased by 2.7 percent on Wednesday.
The market instability was further exacerbated last week when Trump, known for his frequent criticisms of Powell, implied he believed he could remove the Fed Chair before the conclusion of his term in May 2026. Salman Ahmed, head of macro and strategic asset allocation at Fidelity International, described the tensions between the White House and the Fed as indicative of underlying economic stresses. According to Ahmed, Trump’s tariff strategies have increased inflation while impeding growth, pressuring the Fed’s dual mandate. This unresolved tension is expected to sustain enhanced market volatility until tariff policies are definitively settled.
