Some welcome relief in global equities. The TPP midweek trading update

Some welcome relief

Stocks jumped and bonds rose as a wave of relief swept through global markets after the Trump administration defused some of the tension that has rattled investors.

Wall Street was set to build on the biggest equity gains in two weeks, with S&P 500 climbing 2.1% after President Donald Trump allayed fears that he plans to fire Federal Reserve Chair Jerome Powell and eased US-China trade tensions.

Tesla rose about 6% in premarket trading after Chief Executive Officer Elon Musk said he will pull back from his work with the US government to focus on the electric-vehicle maker. This is despite Tesla reporting a 20% drop in car sales for the first three months of the year, compared with the same period last year, while profits fell more than 70%.

The company also warned investors that the pain could continue, declining to offer a growth forecast while saying ‘changing political sentiment’ could meaningfully hurt demand. The rally is a bit of a mystery, but then so is the price of Tesla.

Treasuries rallied, pushing the benchmark 10-year yield five basis points lower to 4.35%. A gauge of dollar strength steadied after rallying from a 16-month low. Bitcoin stormed above $90,000 for the first time since early March. Gold fell as demand for havens cooled.

Trump’s comments on the Fed chief late Tuesday are a walk-back from opinions expressed in the past week that sparked concerns about the US central bank’s independence. On the trade front, Trump and Treasury Secretary Scott Bessent said that a standoff with China can be de-escalated.

Trump said Tuesday he had no intention of firing Powell, despite his frustration with the Fed not moving more quickly to lower borrowing costs. The president posted on social media last week that the Fed chair’s “termination cannot come fast enough!” His rebuke of the Fed and comments from officials that Trump was studying whether he could replace its chief had sent the dollar to the lowest level since December 2023.

On trade, Trump said he plans to be “very nice” to China in any talks and that tariffs will drop if the two countries can reach a deal, a sign he may be backing down from his tough stance on Beijing amid market volatility. The US president also said that final tariffs on China wouldn’t be “anywhere near” the 145% level set.

Europe’s Stoxx 600 index marched 2% higher.

It’s also a busy day for earnings, with shares in SAP SE soaring the most in six years after first-quarter profit at Europe’s most valuable company topped analyst estimates.

Europe’s most valuable company reported first-quarter profit that topped analysts’ estimates, fuelled by its pivot to cloud services.

Adjusted operating income rose 58% in constant currencies to €2.5 billion, the Walldorf, Germany-based company said in a statement on Tuesday. That compares with an average estimate of €2.24 billion by analysts compiled by Bloomberg.

SAP shares rose as much as 11% in Frankfurt on Wednesday, the biggest intraday jump since April 24, 2019. The stock has risen 36% over the last year and its value eclipsed Novo Nordisk A/S and LVMH in March.

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UK markets followed suit and jumped on Wednesday morning, sending the FTSE 100 to its highest level in nearly three weeks as trade tensions eased, with commodity stocks and financial names providing a big lift.

The FTSE 100 was up 1.4% at 8,441.20 within the first hour of trade in London, on track to finish at its highest level since 3 April, the day after Donald Trump first unveiled sweeping tariffs on America's trading partners.

Among the biggest winners of the day are Anglo American, Glencore, BP, Barclays and HSBC all up over 4% at lunchtime.

In contrast the biggest fallers are Reckitt Benckiser, Fresnillo and Endeavour.

Reckitt Benckiser, which is down over 6%, announced first quarter like-for-like sales growth of 1.1% fell short of consensus estimates, which called for 1.4% growth. Group price/mix increased 3% while volumes fell 1.9%, compared with expectations for price/mix to rise by 1.3% and volumes to be flat.

Despite taking market share in Europe, like-for-like sales fell 1.7% as price/mix increased 3% and volumes fell by 4.7%. North America also delivered share gains but a drop in consumer confidence led to a fall in prices and volumes, leaving like-for-like net sales down 0.9%.

Reckitt continued to see strong growth in emerging markets which registered 10.7% like-for-like net revenue growth including double-digit growth in China, and high single-digit growth in India.

Core Reckitt delivered net revenue growth of 3.1% driven by the Germ Protection and Intimate Wellness divisions.

Fresnillo, also fell after the precious metals miner posted a fall in silver and gold production in the first quarter. It did however, reaffirm its full-year production guidance. It posted a fall in silver and gold production in the first quarter of 2025 but reaffirmed its full-year production guidance.

Meanwhile business activity expectations among UK private sector firms also weakened, with the degree of optimism towards the coming year slumping to its lowest since October 2022.

“Many survey respondents noted concerns about worsening global economic prospects in the wake of US tariffs, as well as subdued confidence regarding the outlook for domestic business conditions,” S&P Global said.

On the domestic front, firms also reported employment cutbacks due to decreasing workloads and rising payroll costs. It’s the seventh month staffing numbers have dropped, with it again being noted that voluntary leavers are not being replaced due to squeezed margins.

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The ‘sell America’ trade is still ongoing though, as Amundi SA says it’s seeing a major reallocation as clients pull away from the US and pile into European funds in response to the market upheaval triggered by tariff wars.

Investment clients have “massively repositioned” their portfolios toward European equities and government bond exchange-traded-funds, a spokesperson for Europe’s biggest asset manager told Bloomberg. The direction of flows reflects a “broader market repositioning” on the back of tariff announcements, the person said.

The comments match flow data provided by Morningstar Direct, which shows a general flight from US funds this month. In the first two weeks of April alone, as markets digested President Donald Trump’s announcements on tariffs, US-focused funds managed by Amundi, UBS Group AG and State Street Corp. saw a combined €3.9 billion in client outflows, according to Morningstar data based on equity ETFs.

Over the same period, European equity funds managed by BlackRock’s iShares brand, Amundi and UBS were the biggest gainers, adding a combined €2.4 billion.

Oil pushed higher for a second day. Brent traded above $68, following a 1.8% gain on Tuesday. In another bullish sign, the American Petroleum Institute reported that US crude stockpiles fell last week. Official data are due later.

Oil’s rebound on Tuesday was aided by speculation that Iranian flows may be curtailed after the US announced sanctions against liquefied petroleum gas magnate Seyed Asadoollah Emamjomeh and his corporate network. The Trump administration has previously vowed “maximum pressure” on Tehran.

Oil has since lost ground this afternoon and is now trading lower at $66. All assets are volatile at the moment, and all are susceptible to mind changes from President Trump. Until there is solid confirmation about, well, anything, everything will continue to have good days and bad days. This is just about the most unpredictable market we’ve ever seen. There is no pricing in what he might say next, so sit tight and come along for the ride.

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Disclaimer: The views expressed in this article are the author’s own and should not be considered in rendering any legal, business or financial advice. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only.

Past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to the corresponding past performance.

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