Dollar Retreats, Stocks Drift Ahead of Trade Talks: Markets Wrap

(Bloomberg) — Stocks and bonds fluctuated, and a gauge of the dollar headed for a fourth day of losses as little progress in tariff negotiations and growth concerns about the US prompted investors to pare bets in a volatile market.

US assets were mixed with equity-index futures extending a late Monday rally after the S&P 500 slumped more than 2%. An index of the dollar’s strength lengthened its losses after weakening to a 15-month low. The yen gained beyond 140 per dollar for the first time since September and gold advanced to a record in demand for haven assets. Asian stocks were little changed while European stock futures pointed to a weaker open.

Investors are wading through a slew of headlines on tariff talks after President Donald Trump ratcheted up his global trade war this month by imposing the highest levies in a century. Concerns Trump may be preparing to fire Federal Reserve Chair Jerome Powell is fueling more unease for traders, who await earnings from Tesla Inc. and Alphabet Inc. this week seeking clues on how companies are navigating this new environment.

“We are moving to a fundamentally different epoch in financial markets,” said Ben Powell, Chief Middle East and APAC Investment Strategist at BlackRock Investment Institute. “We’ve had significant changes in the structural side of the global economy that’s actually been taking place several years, and we see President Trump as something of an accelerant for these pre-existing trends.”

Trump’s tirades have forced a reappraisal of the assets fundamental to US economic dominance. The dollar and Treasury bonds, traditional havens at times of stress, suddenly look much less appealing. Investors are also weighing Trump’s warning that the US economy may slow if the Federal Reserve does not immediately reduce interest rates.

The greenback resumed its decline against Group-of-10 peers Tuesday. The yen outperformed all its G-10 peers with investors continuing to look for haven assets. The Bank of Japan was said to be on course to keep raising rates. Meanwhile, China let the yuan weaken against almost all major currencies to support its economy as the trade war with the US deepens.

Read: Bearish Dollar Bets Move Toward Levels That Raise Risk of Recoil

“Market volatility though is driving some haven flow into the yen,” said Shoki Omori, chief desk strategist at Mizuho Securities Co. in Tokyo. “Reports the BOJ sees little need to change their stance on rate hikes are also aiding sentiment in the currency, while denting the dollar.” 

In a sign that nations are attempting to navigate the tussle between the US and China, a high-level Japanese delegation will deliver a letter from Prime Minister Shigeru Ishiba to Chinese leader Xi Jinping this week. Beijing earlier warned nations against making agreements with Washington that hurt China. 

Japan’s finance minister Katsunobu Kato said his administration is in touch with other nations on how best to convey widely-shared concerns about the impact of tariffs during meetings in Washington this week. Prime Minister Ishiba said on Monday that Japan won’t just keep conceding to US demands to reach a deal over tariffs, contrary to how Trump had portrayed the talks.

The US said it’s made “significant progress” toward a bilateral trade deal following talks between Vice President JD Vance and Indian Prime Minister Narendra Modi on Monday. Thailand, which is seeking a reprieve from Trump’s plan to levy a 36% tariff on its goods, said ministerial level talks previously scheduled for this week have been delayed.

“Optimism appears to be fading, with markets potentially beginning to price for a less favorable outcome” in tariff talks, wrote Jun Rong Yeap, market strategist at IG Asia. “Talks are likely to drag on for longer.”

Concerns Trump may be preparing to fire Powell for refusing to cut interest rates faster is the latest concern for markets. The mood on Wall Street has turned from optimism to a ‘Sell America’ mode as Trump upends the global trade order with levies, a move that economists have said will boost inflation and push the US into a recession.

“A multi-front trade war is by itself a lot for stocks to handle, so adding a Fed independence crisis on top of it has markets understandably jittery,” wrote Jeff Buchbinder, chief equity strategist for LPL Financial.

Explainer: Can Trump Fire Powell? How the President Can and Can’t Sway Fed

Amid the uncertainty, investors are piling into gold, with the precious metal topping $3,444 an ounce following a 2.9% surge on Monday.

“It’s an uncertainty, and market is very sensitive at the moment to uncertainty,” said Ecaterina Bigos, CIO for Asia ex-Japan core investments at AXA Investment Managers.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 6:52 a.m. London time
• Nasdaq 100 futures rose 0.4%
• The MSCI Asia Pacific Index rose 0.2%
• Japan’s Topix was little changed
• Australia’s S&P/ASX 200 was little changed
• Hong Kong’s Hang Seng rose 0.5%
• The Shanghai Composite rose 0.4%
• Euro Stoxx 50 futures fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.3% to $1.1544
• The Japanese yen rose 0.7% to 139.91 per dollar
• The offshore yuan fell 0.2% to 7.3088 per dollar
• The British pound rose 0.3% to $1.3417

Cryptocurrencies

• Bitcoin rose 1.1% to $88,332.26
• Ether rose 0.3% to $1,581.46

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.42%
• Australia’s 10-year yield was little changed at 4.28%

Commodities

• Spot gold rose 1.9% to $3,490.31 an ounce
• West Texas Intermediate crude rose 1% to $63.73 a barrel

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Abhishek Vishnoi, Ruth Carson and Chiranjivi Chakraborty.

©2025 Bloomberg L.P.