(Bloomberg) — An uncanny calm swept across markets after Monday’s jarring losses, with stocks, bonds and the dollar steadying even as investors remain concerned over White House hostility toward Jerome Powell and a worsening outlook for world growth.
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Haven-seeking traders sent gold to a record high. The S&P 500 climbed 1% as traders gear up for earnings from Tesla Inc. later in the day. The International Monetary Fund sharply lowered its forecasts for world growth this year and next, warning the outlook would deteriorate further because of the trade war.
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Treasuries and the dollar posted small moves, showing greater stability after Monday, when investors fretted over the implications of any effort to replace the Federal Reserve Chair by President Donald Trump, who has berated Powell for being slow to cut interest rates.
Demand for havens beyond US assets persisted, with bullion topping $3,500 for the first time before paring some gains. The yen strengthened beyond 140 per dollar. Bitcoin advanced 2.4%.
“We expect markets to continue to fluctuate in the short term,” said Vincent Juvyns, chief investment strategist at ING. “We remain neutral on equities. When you don’t know what’s ahead, you just need to know that you don’t know.”
US stocks looked poised to rebound after the S&P 500 and the Nasdaq 100 slid more than 2% in Monday’s session. Concerns that Trump may be preparing to fire Powell have added to unease for traders already grappling with the turmoil unleashed by the president’s tariff onslaught.
Trump’s policies and his broadsides against the Fed have forced a reappraisal of the dollar and Treasuries as havens in times of stress. Some investors are watching to see how trade negotiations go with other countries.
“We are looking at more successful trade negotiations with key trading allies. I put Europe, India, Japan, South Korea, Australia in that category,” Stuart Kaiser, head of equity trading strategy at Citigroup Inc, said on Bloomberg Television on Tuesday. “I think we will see good progress there and that is good for markets.”
Attention later Tuesday will shift to Tesla, which reports first-quarter earnings after market close. The stock has dropped more than 40% this year as controversy over Chief Executive Officer Elon Musk’s role in the federal government has contributed to a global sales slump.
