ADVERTISEMENTBoth US stock markets and the US dollar rose to their highest levels in a month as risk appetite continued to recover ahead of US–China trade negotiations.
US and Chinese officials are scheduled to meet in Switzerland over the weekend, aiming to de-escalate tensions that may lead to mutual trade embargoes. The Trump administration imposed tariffs of up to 145% on imports from China, while China retaliated with 125% tariffs.
President Trump told reporters that tariffs on China may come down, expressing optimism about progress in the upcoming trade talks. “I think it’s going to be substantive,” Trump said at the White House while announcing a trade agreement with the UK. “I think it’s a very friendly meeting. They look forward to doing it in an elegant way.” When asked whether he would lower tariffs on China, he responded, “It could be. We are going to see. Right now you can’t get any higher. It’s at 145%, so we know it’s coming down. I think we’re going to have a very good relationship.”
US stock markets and the dollar had experienced sharp sell-offs throughout much of April amid growing recession fears. Late last month, however, the US president shifted his stance on China, signalling that tariffs would be reduced “substantially.” Since then, Wall Street and the dollar have reversed course, with investors appearing to reload US assets amid signs of easing trade tensions.
“This country will hit a point that you better go out and buy stock,” Trump said on Thursday, referring to the trade deal with the UK and a recently signed tax bill as potential catalysts for the markets. “This country will hit a point that you better go out and buy stock now.”
Trump’s comments and growing optimism over trade talks have sparked a broad-based risk-on rally in financial markets, particularly in US assets. Equities climbed, the dollar strengthened, oil prices rebounded, Bitcoin surged, while gold retreated.
Stocks rally abroad
US stock markets rose for a second consecutive session on Thursday, with the Dow up 0.62%, the S&P 500 rising 0.58%, and the Nasdaq Composite gaining 1.07%. European equities continued to outperform their US counterparts, with the DAX nearing a record high, up 1.02%, and the Euro Stoxx 600 advancing 1.1%. Meanwhile, futures are pointing to a higher open on both sides of the Atlantic markets.
Asian markets were mixed in Friday’s session as investors remained cautious ahead of the trade talks. As of 5:00 a.m. CEST, Japan’s Nikkei 225 rose 1.32%, the ASX 200 gained 0.41%, while South Korea’s Kospi slipped 0.1% and Hong Kong’s Hang Seng Index declined by 0.15%.
US dollar rebounds sharply
In currency markets, the US dollar index surged by over 1% to above 100 for the first time since 11 April. The dollar’s rebound weighed on other major currencies in the G10 group, particularly the euro. The EUR/USD pair fell to just above 1.12 during Friday’s Asian session, its lowest level in nearly a month, down from a multi-year high above 1.15 in late April. The euro had been seen as a haven asset, having gained around 1,000 points (100 points = 1 US cent) against the dollar since February.
Gold retreats while oil surges
Gold prices declined for a second consecutive day, as easing safe-haven demand pressured the precious metal. Gold futures on COMEX dropped 2.5% on Thursday, with a slight rebound to $3,318 per ounce as of 5:00 a.m. CEST. Spot gold fell 3.6% over the past two sessions to $3,313 per ounce.
In contrast, crude oil prices surged to their highest level in a month. West Texas Intermediate (WTI) futures rose above $60 per barrel by 5:10 a.m. CEST, marking a 3.5% increase since Thursday’s open. Brent futures similarly rallied, climbing above $63 per barrel.
Bitcoin reaches three-month high
Bitcoin jumped as much as 6.3% to trade above $103,000 (€91,770), the highest level since 31 January. Cryptocurrencies, often considered high-risk assets, have demonstrated a strong positive correlation with US technology stocks. Trump’s pro-crypto stance previously lifted Bitcoin reach an all-time high of over $109,000 on 20 January.