The FTSE 100 extended gains on Wednesday as global stocks were lifted by the potential easing of US-China trade tensions.
London’s blue-chip index was 1.3 per cent higher at 8,436.04 by 11am, taking its winning streak to eight consecutive sessions.
US stocks were also back in vogue as President Donald Trump appeared to rule out plans to fire the Federal Reserve’s chairman, Jerome Powell.
Investors dumped US assets on Monday after Trump sparked fears over the independence of the country’s central bank, driving gold to a fresh record high.
Trump’s latest climbdown has pushed gold around 5 per cent lower for the day, while the S&P 500, Nasdaq and Dow Jones added around 2.5, 2.7 and 2.6 per cent, respectively, on Tuesday.
Specialty chemicals producer Croda International led the FTSE 100 on Wednesday with a 10.5 per cent climb, but most of the top ten performers were either banks or mining giants.
Antofagasta was 6.8 per cent higher, while Anglo American was 6.7 per cent up, and Asia-focused Standard Chartered had risen 5.9 per cent.
Decline: Stock markets still remain below their ‘Liberation Day’ levels on 2 April
Reprieve for Powell
Trump said he was not planning to sack Jerome Powell, the Fed’s boss, who he has repeatedly criticised for not cutting interest rates fast enough.
The US President rattled global markets on Monday when he called Powell ‘a major loser’ on his Truth Social account, but he told reporters at the White House yesterday that he had ‘no intention’ of firing the Fed chair.
‘I would like to see him be a little more active in terms of his idea to lower interest rates,’ he added. ‘This is the perfect time to lower interest rates. If he doesn’t, is it the end? No, it’s not.’
Markets were also boosted following US Treasury Secretary Scott Bessent’s remarks that a trade war with China was ‘unsustainable’.
In a speech at an investors’ conference hosted by JP Morgan, the former hedge fund manager said he expected a ‘de-escalation’ in the trade war between the US and China.
According to a transcript obtained by the Associated Press, Bessent told investors: ‘I do say China is going to be a slog in terms of the negotiations. Neither side thinks the status quo is sustainable.’
The S&P 500 reacted strongly to the comments, ending Tuesday 2.5 per cent higher, while the Dow and Nasdaq achieved gains of about 2.7 per cent each.
Asian markets also did well in the wake of Trump and Bessent’s words, with the Hang Seng growing 2.4 per cent, the Nikkei up 1.9 per cent and South Korea’s Kospi 1.6 per cent higher.
How have markets fared since Trump’s ‘Liberation Day’?
Susannah Streeter, head of money and markets at Hargreaves Lansdown, remarked: ‘Financial markets are adjusting to Trump’s modus operandi, which is to speak and act impulsively, and then retract some moves later.
‘Just how much of the damage will linger remains to be seen, and markets are likely to stay volatile as trade negotiations play out.’
By comparison, spot gold prices slumped from their record high of $3,500 per ounce on Tuesday by about 5 per cent to $3,334.83/oz.
Investors have increasingly flocked to gold recently as Trump’s on-again, off-again tariffs have incited massive turmoil in global markets.
The US Government currently imposes a baseline tariff of 10 per cent on all imported goods, a 25 per cent tax on steel and aluminium products entering the US, and a whopping 145 per cent tariff on Chinese goods.
Russ Mould, investment director at AJ Bell, said Trump and Bessent’s comments ‘have given markets a sense of optimism that recent chaos might have peaked and we’re heading towards calmer waters.
‘It almost suggests that someone has taken Trump to one side and told him it’s time to be more responsible with his words and actions.’
Stock markets still remain below their levels on ‘Liberation Day’ – 2 April – when Trump announced his sweeping tariff measures, according to AJ Bell data.
The S&P 500 is down 6.7 per cent, while the FTSE 100 is 1.8 per cent lower.
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