Global Markets Rise Amid China-US Trade Tensions and Fed Rate-Cut Speculation

Most global markets gained on Thursday as investors balanced the latest developments in the China-US trade conflict with expectations that the Federal Reserve will continue cutting interest rates later this year.

Equities have been volatile this week following US President Donald Trump’s renewed threats of 100 percent tariffs on Chinese goods, a response to Beijing’s recent rare-earth export restrictions. While he later softened his language, the exchange has fueled uncertainty, threatening the fragile truce that has stabilized markets in recent months.

Trump further stirred unease on Wednesday, telling reporters that the US and China were “in a trade war” and emphasizing that tariffs were necessary to protect American interests. In contrast, Treasury Secretary Scott Bessent suggested a more conciliatory approach, proposing a potential extension of the current tariff pause as talks on rare-earth exports continue.

“Together, they’re running the classic good cop, bad cop routine,” said Stephen Innes of SPI Asset Management. Trump’s aggressive stance sets the tone, while Bessent’s calm suggests the possibility of a negotiated extension to the 90-day tariff truce, providing markets a mix of anxiety and relief.

Following positive trading in the US, most Asian markets—including Tokyo, Shanghai, Sydney, Seoul, Wellington, Taipei, Mumbai, and Bangkok—rallied, buoyed by expectations of further Fed rate cuts. However, Hong Kong, Singapore, and Jakarta recorded losses. In Europe, London and Frankfurt opened lower, while Paris edged higher.

The Federal Reserve’s recent “Beige Book” report highlighted a softer US job market, reinforcing calls for additional rate reductions. Fed Chair Jerome Powell also cautioned that downside employment risks had increased. Economists at Bank of America remain cautious, noting that uncertainties around trade, inflation, growth, and domestic policies persist.

Investor concerns have also driven gold to record levels, hitting $4,242.12 on Thursday, while India’s rupee strengthened after central bank intervention and supportive market conditions.

Key Market Figures (0715 GMT):

Tokyo – Nikkei 225: +1.3% at 48,277.74

Hong Kong – Hang Seng: -0.3% at 25,839.56

Shanghai – Composite: +0.1% at 3,916.23

London – FTSE 100: -0.2% at 9,406.97

Euro/USD: $1.1652

Pound/USD: $1.3411

Dollar/Yen: 151.15 yen

WTI Crude: $58.82/barrel

Brent Crude: $62.45/barrel

New York – Dow: Flat at 46,253.3.