Asian equities and US futures advanced Wednesday as investors reacted to reassurances from President Donald Trump regarding economic growth and trade policy.
Markets in Japan, Hong Kong, and South Korea climbed, while Australian stocks edged lower, with the S&P/ASX 200 hovering near correction territory. Australia’s failure to secure an exemption from US steel and aluminum tariffs weighed on sentiment. Meanwhile, US Treasury yields and the dollar strengthened ahead of an upcoming consumer inflation report.
Investor Sentiment Improves on Economic Reassurances
Futures for the S&P 500 and Nasdaq 100 turned positive after Trump dismissed recession concerns, insisting that the US economy remains on a strong trajectory. European futures surged up to 1% following Ukraine’s acceptance of a US-brokered 30-day ceasefire proposal with Russia.
Despite the relief, markets remain volatile. Trump’s tariff policies, geopolitical risks surrounding Ukraine, persistent inflation, and the Federal Reserve’s uncertain rate path have fueled market turbulence. The VIX volatility index remains elevated, reflecting lingering investor anxiety.
“Any easing of geopolitical tensions is a welcome sign for markets,” said Ken Wong, an Asian equity strategist at Eastspring Investments. He noted that the temporary ceasefire in Ukraine and a de-escalation of US-Canada trade disputes have supported sentiment.
Trump’s Economic Agenda and Market Outlook
Speaking at a Business Roundtable meeting, Trump emphasized his commitment to streamlining regulations and hinted at a major electricity infrastructure project. He reiterated his stance on business-friendly policies, including potential tax breaks for companies that manufacture products in the US.
Despite his optimism, major banks have tempered their forecasts for US markets. JPMorgan, Goldman Sachs, and RBC Capital Markets have issued cautious outlooks, citing concerns over tariffs and stretched valuations in tech stocks. Citigroup downgraded its rating on US equities to neutral, while Goldman Sachs lowered its year-end S&P 500 target from 6,500 to 6,200.
US-China Trade and Inflation in Focus
Investors continue shifting funds into Chinese stocks, with a Hong Kong-listed Chinese equity index up 20% this year, despite ongoing trade tensions with the US. Talks between Washington and Beijing remain stalled, with both sides struggling to agree on a framework for negotiations.
“The stabilization of China’s property market and government measures to stimulate consumer spending will support economic resilience,” said Rajiv Batra, head of Asia equity strategy at JPMorgan. “China still has monetary policy flexibility if needed.”
In the US, focus turns to consumer inflation data set for release later Wednesday. Economists expect a 0.3% increase in the Consumer Price Index for February, following a 0.5% rise in January. Persistent inflation could limit the Federal Reserve’s ability to cut interest rates, raising concerns about economic growth amid Trump’s trade policies.
“The market is watching for signs of inflationary stickiness,” said Kyle Rodda, senior analyst at Capital.com. “If inflation remains elevated, the Fed may have limited room to maneuver if the economy weakens.”
With markets on edge, investors remain divided on whether tariffs or Fed policy will play a bigger role in shaping the trajectory of US equities in 2025.
Related topics:
Tariffs Spark Market Sell-Off as Fears of Escalating Trade War Grow
Elon Musk’s Net Worth Drops $116 Billion as Tesla Stock Falls Over 40%
