World stocks largely held onto recent gains on Wednesday and oil prices rose on news of a forthcoming meeting between top U.S. and Chinese trade officials.
But the dollar was down for a fourth session and European stocks eased as caution prevailed about prospects for any tariff deal ahead of a U.S. Federal Reserve decision on interest rates.
U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China’s top economic official for talks that could yield the first step in resolving a trade war disrupting the global economy.
“My sense is this will be about de-escalation,” Bessent said of the meeting, set for the weekend in Switzerland, while China sounded more guarded and cited a proverb about actions speaking louder than words.
“Most markets outside the United States have shrugged off those headlines in relatively short order, especially given that hopes for any significant progress to be made over the weekend remain very slim,” said Michael Brown, a senior strategist at broker Pepperstone.
“I think what we’re really seeing… is just the classic indecisiveness that often takes hold ahead of an FOMC meeting,” he added, referring to the U.S. central bank.
The Fed meets later on Wednesday to set interest rates, with markets implying nearly no chance of a change.
While U.S. stock futures rose with those tied to the benchmark S&P 500 up 0.6%, Europe’s STOXX 600 and Britain’s FTSE 100 indexes were both down about 0.3% on Wednesday.
The dollar was down 0.1% against a basket of currencies, falling for the fourth session in a row.
TARIFFS
Tiptoeing higher for weeks, world stocks have largely recouped their losses since the April 2 “Liberation Day” tariff announcements in anticipation of some kind of rapprochement or breakthrough to cut the levies.
But the dollar, which took a beating, is still more than 4% lower than at the end of March.
Later in the session, all focus will be on the Fed, which meets for the first time since U.S. President Donald Trump’s tariffs announcement whipsawed financial markets.
“The meeting will likely shape expectations more than usual,” said Commerzbank strategist Erik Liem.
Fears that Trump could fire Fed Chair Jerome Powell had also hurt U.S. markets last month.
“Another possible source of support for the dollar is today’s (Fed) meeting … if Chair Powell strikes a hawkish tone to assert his independence from political influence,” analysts at the Commonwealth Bank of Australia said in a note.
While a hold on Wednesday is the consensus, markets only see around a 30% chance of a cut in June, down from about 60% before last week’s strong labour market data.
Elsewhere, the euro was steady above $1.136 after German conservative leader Friedrich Merz was elected chancellor in a second round of voting on Tuesday, after a shock defeat in the first attempt.
In commodity markets, Brent crude futures was up 0.6% at $62.55, but remains down some 15% since the end of March.
Gold slipped 1.3%, sitting more than $100 an ounce below last month’s record high.
Pakistan’s international bonds rose and stocks cut hefty losses after India launched strikes on the country in response to April’s tourist killings, sparking the worst fighting in over two decades between the nuclear-armed neighbours.
China announced a rate cut, more cash for the banking system and expanded a channel for insurance money to flow into stocks, though reaction was muted as investors await fiscal stimulus and all eyes are on the weekend’s U.S.-China talks.
A sizzling rally in Asian currencies cooled, with Korea’s won down sharply and the rate cut weighing on China’s yuan.
=== Reuters ===
