(Reuters) - What matters in U.S. and global markets today. A look at the day ahead in U.S. and global markets by Dhara Ranasinghe, Editor, Financial Markets EMEA.
The world's financial markets have got used to the fact that a lot can change in less than 24 hours. And waking up on Wednesday provides yet another example of that.
U.S. President Donald Trump has backed away from his threats to fire Jerome Powell after days of criticising the Federal Reserve chief for not cutting interest rates. U.S. Treasury Secretary Scott Bessent, meanwhile, said he believes there will be a de-escalation in U.S.-China trade tensions.
The net-net effect, the sell-America trade is abating (for now). The beaten-up dollar is higher against major rivals, Treasury yields are lower and U.S. stock futures point to a decisively strong open on Wall Street.
Mike Dolan is enjoying some well-deserved time-off this week, but the Reuters markets team is here to provide you with all the information you need to start your day.
Today's Market Minute
* Trump has backed off from threats to fire Fed Chair Powell after days of intensifying criticisms of the central bank chief for not cutting rates.
* Tesla CEO Elon Musk says he'll cut back significantly the time he devotes to the Trump administration from next month and spend more time running his many companies.
* U.S. Treasury Secretary Bessent believes there will be a de-escalation in U.S.-China trade tensions, but negotiations with Beijing have not yet started and would be a "slog," according to a person who heard his closed-door presentation to investors at a JP Morgan conference.
* Hyundai Steel's $6 billion US investment is drawing investor ire and testing Seoul's tariff strategy.
* Worldwide economic output will slow in the months ahead as President Trump's steep tariffs on virtually all trading partners begin to bite, the International Monetary Fund reckons, as global finance chiefs swarmed Washington seeking deals with Trump's team to lower the levies.
A brighter day?
On the one hand, the rally in world markets and selloff in safe-havens is a natural correction of the past weeks of heavy selling, especially of U.S. assets.
On the other, it is the right response to signs of an easing in worries, whether that's global trade tensions or central bank (read "Federal Reserve") independence.
U.S. stock futures are trading up more than 1%, world stocks are up around 0.5%. while gold is down 2% and other safe havens such as Japan's yen and the Swiss franc are softer too.
The key questions of course are: will it last? And could the positive undertones coming through across world markets be harbinger of better times after the relentless selling of the last few weeks?
Easy now, some of you might say - and with good reason.
Even if markets find more stable footing, a high degree of uncertainty is likely to remain in place for some time and the damage inflicted by tariffs is already taking a toll.
Just take a look at the flash purchasing managers index data coming out of Europe this morning.
Euro zone business growth has stalled this month, the PMI survey showed, with activity in the bloc's dominant services industry contracting and the prolonged downturn in manufacturing continuing.
And with tariffs on goods coming into the world's No. 1 economy now at their highest in a century, the IMF said on Tuesday it projects global growth in 2025 will slow to 2.8% - its slowest since the COVID-19 pandemic - from 3.3% in 2024.
Others note that the perception of U.S. assets has changed given U.S. tariff policy and lingering concerns about central bank independence, meaning volatility will likely stay - although the VIX index coming off peaks seen earlier in April is a reassuring sign.
A U.S. sale of five-year government bonds will likely be watched closely after Tuesday's two-year bond sale was, by most accounts, not amazing.
Tesla, meanwhile is in focus, with its shares up nearly 8% in the premarket.
Chart of the day:
The automaker reported profitability for its core auto business topped rock-bottom expectations in the first quarter, while missing on other metrics such as revenue and net profit, and CEO Elon Musk says he will cut back on time devoted to the government from next month and spend more time running his many companies.
Also keep an on eye on Washington, where the second day of IMF/World Bank meetings will likely be dominated by the backdrop of trade tensions.
Top Swiss officials for instance will this week test whether big commitments to the U.S. can help secure relief from import tariffs, after pharma giant Roche followed rival Novartis in announcing major investments in the United States.
U.S., Ukrainian and European officials meanwhile gather in London on Wednesday to discuss ending Russia's war in Ukraine but chances of any breakthrough look slim after most foreign ministers pulled out despite U.S. pressure for a deal.
Today's events to watch
* It's day two of the IMF/World Bank meetings in Washington with finance ministers around the world queuing up to speak to their U.S. counterpart, Treasury Secretary Bessent.
* A squadron of central bankers speak in Washington including Bank of England Governor Andrew Bailey and ECB chief economist Philip Lane
* U.S. Treasury auctions five-year bonds
* Global flash PMIs April are released
* UK finance minister Rachel Reeves speaks to media in Washington
(Reporting by Dhara Ranasinghe; Editing by Toby Chopra)
