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Global actions gathered on Wednesday after Donald Trump said that he did not intend to dismiss the president of the Federal Reserve Jay Powell, raising concerns about the independence of the American Central Bank which had shaken the markets earlier this week.
Tower contracts on S&P 500 increased by 2.3% ahead of New York Open, while US treasury bills and European actions have also won.
The movements were built on Tuesday rebounded for the reference to Wall Street, which increased by 2.5% while Trump indicated a potential relaxation of trade tensions with Beijing, saying that the prices on Chinese products “would decrease considerably”.
The president repeatedly criticized Powell for refusing to reduce interest rates, and last week said that he thought he could reject the president of the Fed before the end of his mandate in May 2026.
“The markets will welcome his vote of trust (drying), but damage to the independence of the Fed have been caused,” said Dario Perkins, of the TS Lombard, in a note to customers. “Trump wants rate drops, but his vicious attacks against Powell have made more difficult for the central bank to deliver.”
The Broad Stoxx Europe 600 index increased 1.7% on Wednesday morning, and Germany’s Dax index extended recent gains with a 2.6% increase.
The 10-year-old American treasury yield dropped 0.06 percentage points to 4.33%, continuing a recent drop after a sharp increase earlier this month. Bond yields come opposite prices.
The US dollar has won 0.2% against a basket of peers, although the currency continues to hover around several years having dropped by more than 8.5% this year.
Wednesday’s movements come after a volatile month for the financial markets after the announcements of Trump’s so-called “Liberation Day” sparked a strong collapse of American actions. The S&P 500 remains more than 10% less so far this year despite the rebound this week.
The technological actions have been even harder, the NASDAQ composite index losing more than 15% since the start of the year. The term contracts on the NASDAQ increased 2.7% on Wednesday.
Salman Ahmed, world leader in the allocation of macro and strategic assets at Fidelity International, described the confrontation between the White House and the Fed as “a manifestation of a fundamental tension” in the economy.
He said that Trump’s pricing policies “exerted pressure on Fed’s double mandate” by increasing inflationary pressures while injuring growth.
“This tension will not fundamentally disappear as long as we do not know where the prices will settle,” said Ahmed. “The daily information flow will lead to high volatility.”
