US equities surged early Wednesday but finished the session well off their highs, as enthusiasm over potential easing in US-China trade tensions gave way to a more cautious tone. President Trump’s remarks on reducing tariffs, alongside his assurance that Federal Reserve Chair Jerome Powell would remain in his post, lifted sentiment across global markets. The Nasdaq led the major indexes higher, boosted by tech and chip stocks with heavy China exposure. European and Asian bourses also posted strong gains, driven by renewed hopes of avoiding a continued trade standoff. Still, a mixed batch of PMI data and a drop in oil prices kept investors on alert.

Key Takeaways:

  • Dow Rallies 400 Points but Fails to Hold Early Surge: The Dow Jones Industrial Average climbed 419.59 points, or 1.07%, to 39,606.57, marking its second consecutive gain. The index was up more than 1,100 points earlier in the day after comments from President Trump signalled a shift toward reduced trade tariffs. Gains faded late in the session as traders grew cautious about the sustainability of the rally.
  • S&P 500 Climbs Nearly 1.7% Led by Tech Strength: The S&P 500 advanced 1.67% to close at 5,375.86. Technology stocks with significant exposure to China led the charge. The benchmark index held onto solid gains even as early strength moderated into the close.
  • Nasdaq Jumps 2.5% on China-Linked Megacaps and Chips: The Nasdaq Composite rose 2.50% to 16,708.05. Tesla, Apple, and Nvidia were among the top performers as investors rotated back into growth names tied to global supply chains.
  • Europe Climbs on Trade Relief and Strong Tech Gains: European markets rallied, with the Stoxx 600 up 1.78% as risk appetite returned on hopes of easing US-China trade tensions. Germany’s DAX surged 3.20%, France’s CAC 40 rose 2.34%, and Italy’s FTSE MIB added 1.33%. The UK’s FTSE 100 gained 0.90% to close at 8,403.18. Technology stocks led, rising 3.96%, while utilities fell 1.4%. EU exports to the US rose 22.4% in February to €51.8 billion, while imports climbed 2.4%, producing a €23 billion surplus. The Eurozone composite PMI fell to 50.1, with services at 49.7 and manufacturing improving to 48.7. UK services dropped to 48.9 and manufacturing to 44.0. Germany’s services PMI slid to 48.8, dragging the composite to 49.7.
  • Asia Rallies With Hong Kong And Japan Leading Gains: Asian markets posted strong gains as Trump’s comments on reducing tariffs boosted investor confidence. Hong Kong’s Hang Seng Index soared 2.37%, and the Hang Seng Tech Index rose 3.07%. Japan’s Nikkei 225 gained 1.89%, the Topix added 2.06%, and South Korea’s Kospi advanced 1.57%. Australia’s ASX 200 rose 1.33%, while India’s Nifty 50 and BSE Sensex added 0.52% and 0.45%, respectively. Singapore’s CPI held steady at 0.9% year-on-year in March, lower than expected. China’s CSI 300 was flat at 3,786.88, reflecting caution despite improved global sentiment.
  • Oil Drops Nearly 2% as OPEC+ May Accelerate Supply Hike: Brent crude settled at $66.15, down 1.91%, and WTI fell 2.17% to $62.29. OPEC+ members are considering faster output increases in June, according to sources. Kazakhstan’s energy minister stated that national priorities would come before OPEC+ quotas, raising concerns over coordination. US crude inventories rose by 244,000 barrels, against expectations for a draw of 770,000 barrels, adding further pressure to the market. Traders are now watching for signs of supply discipline amid mixed demand outlooks.
  • Treasury Yields Mixed After Trump Reaffirms Powell’s Job Security: The 10-year Treasury yield closed unchanged at 4.387%, while the 2-year yield rose 7 basis points to 3.859%. President Trump said he has “no intention” of firing Federal Reserve Chair Jerome Powell, easing investor fears over central bank independence. Market focus now shifts back to policy expectations and economic data.
  • US PMI and Housing Data Paint Uneven Growth Picture: April manufacturing PMI rose to 50.7, indicating modest expansion and beating forecasts. The services PMI fell to 51.4 from 54.5, coming in below expectations. New home sales climbed 7.4% in March to a 724,000 annual rate, the highest since September 2024, as lower mortgage rates boosted demand. The housing data signalled strength, while services softness pointed to slower consumer activity.

FX Today:

  • EUR/USD Retreats from Highs, Consolidates Above Support: EUR/USD fell 0.84% to 1.1323 after peaking at 1.1419 during early trade. The pair remains in a strong uptrend since mid-March, having risen from below 1.0800 and cleared the 50-day (1.0685), 100-day (1.0626), and 200-day (1.0766) SMAs. Initial support is located at 1.1250, followed by stronger demand near 1.1000. The bullish structure remains intact above this zone. Resistance sits between 1.1420 and 1.1450, which capped the session highs. A break above this area would resume upward momentum and target 1.1600.
  • GBP/USD Pulls Back but Maintains Bullish Structure Above 1.3000: GBP/USD declined 0.50% to close at 1.3266 after hitting a recent high near 1.3430. The pair has been in an uptrend since February, supported by rising 50-day (1.2900), 100-day (1.2692), and 200-day (1.2833) moving averages. Immediate support lies between 1.3100 and 1.3200, with stronger trend support at the 1.3000 handle. Despite short-term weakness, momentum remains positive as long as price stays above this level. A push above 1.3430 would confirm trend continuation, with scope to extend toward 1.3600. 
  • USD/JPY Jumps Over 1% but Remains Below Key Averages: USD/JPY rallied 1.30% to settle at 143.42, recovering sharply from recent lows near 140.00. Despite the bounce, the pair continues to trade below its 50-day (147.96), 100-day (151.46), and 200-day (150.24) SMAs, keeping the broader trend bearish. Short-term momentum favours the bulls, but upside progress will be challenged by resistance in the 145.00–147.50 range. Immediate support now lies at 141.00, followed by 140.00. A sustained break above 148.00 would be needed to shift sentiment.
  • USD/CAD Attempts Recovery, Faces Pressure: USD/CAD climbed 0.55% to 1.3883, bouncing modestly from support near 1.3800. The pair has broken below the 50-day (1.4213) and 100-day (1.4270) SMAs, and now faces strong resistance at the 200-day SMA at 1.4005. Momentum remains weak following the earlier sell-off from April highs above 1.4300. Short-term upside appears limited unless buyers can push price above 1.4050. A break below 1.3800 could open the door to 1.3700, a level not tested since February. 
  • Gold Slumps 2.6% as Bulls Lose Momentum Near $3,300: Gold (XAU/USD) fell 2.57% to close at $3,292, deepening its pullback from April highs near $3,500. The decline follows a steep multi-week rally that now appears to be correcting toward support. The 50-day SMA at $3,033 marks the first major level to watch, while additional support lies at the 100-day ($2,867) and 200-day ($2,721). For bulls, holding the $3,250–$3,280 zone is critical to maintain upward structure. Resistance is now seen at $3,350, and a break above this could suggest renewed buying pressure. Failure to hold current levels may expose $3,100 next.

Market Movers:

  • Tesla Jumps 5% on Tariff Relief and Musk Comments: Shares of Tesla rose more than 5% as easing US-China trade tensions lifted sentiment around the EV maker’s China exposure. Additional support came from CEO Elon Musk’s remark that his involvement in Trump’s Department of Government Efficiency will be reduced starting next month.
  • Meta, Amazon, Nvidia Lead Tech Surge: Meta and Amazon each gained over 4%, while Nvidia added more than 3% as investors returned to high-growth tech names. These stocks rebounded strongly on signs of improving US-China relations, which would benefit global supply chains and semiconductor demand.
  • Chip Stocks Rally on Trade Optimism: Marvell Technology surged over 6%, Lam Research gained more than 5%, and AMD, ARM, MCHP, and GlobalFoundries climbed over 4%. Micron, ON Semi, KLA, AMAT, NXPI, and Texas Instruments all added over 3% on hopes of better cross-border trade conditions.
  • Crypto Stocks Rise as Bitcoin Hits 7-Week High: Riot Platforms jumped 6%, Coinbase rose more than 3%, and MicroStrategy and MARA each gained over 1%. The moves tracked Bitcoin’s 2% rise, driven by renewed risk appetite and technical momentum.
  • Boeing Gains 6% on Solid Revenue Beat: Boeing stock rose over 6% following Q1 revenue of $19.50 billion, topping estimates of $19.37 billion. Investors reacted positively to the results amid ongoing recovery in commercial aircraft deliveries.
  • Vertiv Pops on Upbeat Sales Guidance: Vertiv Holdings jumped more than 9% after raising its full-year revenue forecast to a range of $9.33B–$9.58B, well above its prior view and the $9.20B consensus. Strong demand for data centre solutions continues to drive performance.
  • Intel Rallies 6% on Cost-Cutting Report: Intel shares surged over 6% after Bloomberg reported plans for the company to cut more than 20% of its staff in a restructuring aimed at streamlining operations and improving margins.

Stocks extended gains for a second session on Wednesday, fuelled by optimism that US-China trade tensions may ease and relief over President Trump’s support for Fed Chair Powell. Tech and chip stocks led the rebound, while investors also responded positively to upbeat earnings across several sectors. Despite the strong start, major indexes faded late in the session, suggesting markets are still cautious about the sustainability of any deal. Mixed economic data and weaker oil prices also tempered enthusiasm. Looking ahead, traders will watch for further trade headlines, upcoming inflation data, and additional corporate earnings to assess the market’s direction.