Asian Shares Follow Wall Street Higher As Trump Backs Off Threat To Fire Fed Chief

(RTTNews) - Asian stocks followed Wall Street higher on Wednesday after U.S. President Donald Trump backed down from threats to dismiss Federal Reserve Chair Jerome Powell and also signaled that 145 percent tariffs on Chinese imports will "come down substantially".

However, Trump noted that he would set the terms of a deal if Beijing did not enter talks.

U.S. Treasury Secretary Scott Bessent was reported earlier on Tuesday saying that 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".

The dollar rebounded and longer-dated Treasuries rallied as Trump's comments helped calm investor fears over the Fed's independence and the possible threat to U.S. monetary and fiscal credibility.

A recovery in risk assets dented demand for bullion while oil extended an overnight rally on the back of new Iran sanctions and industry data showing a drop in U.S. crude oil inventories.

Chinese markets underperformed regional peers, with the benchmark Shanghai Composite index closing down 0.1 percent at 3,296.36 as the IMF slashed its China growth forecast for this year to 4 percent, well below Beijing's official target.

Hong Kong's Hang Seng index rallied 2.37 percent to 22,072.62 on hopes of easing U.S.-China trade tensions.

Japanese markets rose sharply following optimistic earnings reports from key U.S firms and Tesla founder Elon Musk's announcement that he would significantly scale back his Trump administration work in May to focus on Tesla.

The Nikkei average jumped 1.89 percent to 34,868.63, ending at a three-week high led by technology and auto shares. The broader Topix index settled 2.06 percent higher at 2,584.32.

Seoul stocks rallied to hit a one-month high due to easing Sino-U.S. trade tensions and hopes for upcoming trade talks to be held in Washington on Thursday.

Industry Minister Ahn Duk-geun said that the country will seek "a swift solution" over auto tariffs, and have consultations over trade, shipbuilding and energy cooperation, among other issues, "in a calm and prudent manner."

The Kospi average climbed 1.57 percent to 2,525.56, marking the highest level since March 28.

Hyundai Motor rose 2.4 percent, POSCO Holdings rallied 3.2 percent, SK Hynix surged 4.1 percent and LG Energy Solution jumped 5.1 percent.

Australian markets advanced to reach a three-week high, led by banks and energy stocks.

Gold miners suffered heavy losses as bullion extended losses for a second day running after hitting a new record high above $3,500 an ounce.

The benchmark S&P/ASX 200 rose 1.33 percent to 7,920.50 while the broader All Ordinaries index closed 1.39 percent higher at 8,125.20.

Woodside Energy Group surged 3.6 percent after beating first-quarter revenue expectations and backing its FY25 production outlook.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index ended up 1.01 percent at 11,956.47.

U.S. stocks surged overnight as investors cheered upbeat earnings news from the likes of 3M and GE Aerospace and comments from Treasury Secretary Scott Bessent that the tariff standoff with China cannot be sustained by both sides and there will be de-escalation in the "very near future".

At the same time, he suggested any formal agreement may take time. "If we walked out of negotiations in two or three years with something that looked like that, I'd consider it a huge win."

Separately, President Donald Trump also expressed openness to negotiation and hinted at a partial reduction in tariffs but warned that the U.S. will set the terms of trade if China refuses to reach a deal.

The Dow and the tech-heavy Nasdaq Composite both rallied 2.7 percent to end higher for the first time in five days while the S&P 500 jumped 2.5 percent.