Asia set to rally as trade tensions ease and Trump dials down the chaos

Markets

Asian markets look poised to open on a firmer footing as traders price in a soft thaw in U.S.-China tensions — the first meaningful walk-back we’ve seen in weeks. While there’s no grand peace accord on the table, the tone has shifted just enough to throw cold water on the Axis vs. Allies “Trade War 2.0” narrative that had been gaining serious traction.

Treasury Secretary Scott Bessent’s behind-closed-doors remarks hit differently. Labelling the current tariff standoff as “unsustainable” and calling for near-term de-escalation, Bessent effectively planted a flag in the middle of the chaos. It’s not decoupling; it’s de-risking — and that nuance is breathing life back into Asian risk.

Add to that Trump’s surprisingly measured tone — yes, measured — saying he has “no plans” to fire Fed Chair Jerome Powell, and the global macro mood gets a bit of a sentiment tailwind. Markets had been bracing for another Fed credibility blow, but Trump’s rhetorical retreat helps dial down systemic risk pricing.

And if that wasn’t enough for a bounce, Tesla is giving tech bulls another reason to cheer. Shares caught a solid bid after Elon Musk told investors he’s planning to scale back his role in Trump’s government cost-cutting circus — essentially putting down the Doge-fueled MAGA megaphone for now. That’s welcome news for shareholders, who’ve watched brand damage accumulate from Musk’s off-piste politics while wondering whether their CEO was still steering the Tesla ship full-time.

We're getting a global sentiment reset. Nothing’s “fixed,” but when two of the world’s most chaotic headline machines (Trump and Musk) both hit the rhetorical brakes at the same time — and U.S.-China trade stress dials down a notch — Asia takes that as a green light. Risk is back on the menu, at least for the open.

Bessent flips the script: From tariff trenches to handshake hype

U.S. Treasury Secretary Scott Bessent just dropped the clearest signal yet that the tariff war with China is approaching its sell-by date. In a closed-door investor summit hosted by JPMorgan on Tuesday, Bessent laid it out straight: the current standoff isn’t sustainable for either side, and both Washington and Beijing will have to find an off-ramp soon.

Behind closed doors, Bessent called the status quo — 145% U.S. tariffs on Chinese goods and 125% retaliatory duties on U.S. exports — a “trade embargo in all but name.” According to those in the room, his tone was firm but pragmatic. This wasn’t wishful thinking — it was the kind of forward guidance the market has been starving for.

The message? De-escalation is coming — and not in some distant, abstract timeline. Bessent framed it as a near-term inevitability, even if a full-scale trade agreement will take longer to hammer out. His stance reframed the entire narrative: this isn’t about decoupling, it’s about managing a strategic rivalry without nuking the global supply chain in the process.

Trump, when pressed later in the day, played it cool — “doing fine” with Beijing, “not a hardball negotiation,” and even tossing in that he’d be “very good to China.” Classic soft pivot. But make no mistake: this isn’t Trump freelancing on trade policy mid-air with a Sharpie and a napkin. With Bessent controlling the narrative, the playbook suddenly feels more like a whiteboard in the Situation Room — thoughtful, coordinated, and tactical.

My take? Don’t expect a full unwind of the tariff regime. Instead, expect a shift. The front line of this economic conflict is already moving — from blanket tariffs to targeted tech. Think EVs, green energy, semis — high-value, high-leverage sectors where control of the supply chain matters more than headline trade balances.

Expect another 90-day extension layered over the current truce to the reciprocal crowd — a breathing space to cool tensions, rework logistics, and give small businesses time to diversify supply chains. It buys space politically and strategically without losing face. In market terms, it opens the door to optionality — something traders haven’t had much of since this whole standoff ramped up.

Bessent just gave us a glimpse of what a grown-up de-risking strategy looks like. If he stays in the driver’s seat, we may just sidestep the worst-case decoupling spiral. But don’t get too comfortable — this trade war is evolving, not ending. The next chapter won’t be fought with tariffs — it’ll be fought with chips, lithium, and control of the 21st-century supply grid.

Trump walks it back — And just like that, Gold and Euro get smoked

Just after the cash market closed, President Trump did what he does best — grabbed the mic and nuked the narrative. In classic Trumpian fashion, standing before a pack of reporters, he casually defused the biggest market driver of the week: “No, I have no plans to fire Powell.”

Poof. There goes the gold rally. There goes EUR/USD rally.

This wasn’t some grand pivot in monetary policy. It was a tone shift — and in this market, that’s all it takes. After a week of headlines stoking Fed interference fears, traders had started to price in full-blown institutional chaos: Powell under fire, the Fed losing credibility, safe havens like gold exploding, and rate differentials tilting against the dollar.

But behind the scenes? It’s hard not to imagine Treasury Secretary Bessent pulling Trump aside and walking him through the macro consequences: You fire Powell, term premia explode, USTs unanchor, and even if you install a dove, you’ve just killed your fall guy if the economy rolls over.

Fast-forward a few hours and Trump’s suddenly diplomatic: blames the media, claims he never intended to fire Powell, and wraps it in a half-hearted nudge for the Fed to “be a little more active.” Markets got the message — no firing, no coup, and Fed independence lives to fight another day.

The impact was immediate. Gold, which had melted up through $3,500 on a mix of fiat debasement fears and Fed credibility erosion, lost its footing. EURUSD got clipped hard as well, unwinding gains built on hopes that the ECB was somehow more on an adult in the central bank room than the Fed. With Trump sounding de-escalatory, rate divergence snapped back into focus, and the dollar caught a fresh bid.

It’s a masterclass in how fragile narrative-driven markets have become. You don’t need a rate cut or a headline deal — you just need tone. One presidential sentence flipped the entire reflation trade on its head.

This is also a stark reminder of what Trump represents in this market: not just headline risk, but positioning risk. He stirs the pot, traders pile in, then he douses it with five seconds of calm, and the whole tape reverses.

The market was bracing for a showdown — maybe even a weekend of Fed vs White House escalation. Instead, we got five seconds of garden-hose diplomacy. No firing. No fireworks. Just strong dollar vibes creeping back into the picture.

The de-escalation took the edge off one of the week's most significant institutional overhangs.

With the Fed's independence temporarily preserved and the dollar catching a bid, risk assets are breathing easier.

This was a textbook Trump two-step: ignite the trade, then blow it out. If you were long on gold or the euro and didn’t heed the technical warning signs, you didn’t get burned by policy — you got burned by the sound bite. In this tape, conviction is fragile, and the narrative can flip faster than your stop-loss triggers.

Tesla catches a post-close bid as Musk pulls back from the MAGA megaphone

Tesla shares are catching a solid bid in extended trade, and it’s not just earnings math doing the heavy lifting — it’s the optics. On the investor call, Elon Musk signaled he’ll be scaling back his involvement in Trump’s government cost-cutting campaign, a move that shareholders had been quietly — and not so quietly — begging for.

Let’s be clear: Musk’s loud, chainsaw diplomacy in D.C. may have scored political points, but it’s bruised Tesla’s brand where it hurts — Europe, California, and ESG-conscious corners of the equity market. Investors have grown increasingly uncomfortable with the world’s richest man moonlighting as a political lightning rod while Tesla battles soft demand, stiff EV competition, and a valuation that still demands growth perfection.

Musk’s pivot — even if it’s half-walked — looks like a re-centering move. And the tape likes it.