US stock futures climbed and the dollar strengthened on Wednesday as anticipation built around a weekend meeting between top US and Chinese trade officials in Switzerland. Despite cautious sentiment in Asian markets, investors viewed the development as a potential easing of trade tensions just hours before the Federal Reserve’s interest rate decision.
Stock Gains Reflect Trade Optimism
The S&P 500 futures and Hong Kong’s Hang Seng index both advanced by 0.6%, though they pared earlier gains through the Asian session. China’s CSI300 rose 0.4%, while Japan’s Nikkei remained largely unchanged. The rally in Asian currencies slowed, with the Korean won falling sharply and the Chinese yuan under pressure following a rate cut.
Cautious Optimism Surrounds US-China Meeting
US Treasury Secretary Scott Bessent described the upcoming meeting as a chance for “de-escalation,” while Chinese officials expressed more guarded sentiments, quoting the proverb that “actions speak louder than words.”
Fed Rate Decision Looms
Markets are closely watching the Federal Reserve’s rate decision expected later today. While last week’s solid labor market data has reduced the likelihood of a rate cut, analysts believe Fed Chair Jerome Powell may take a firm stance to demonstrate independence from political pressures.
Geopolitical and Economic Tensions Add Complexity
Additional developments include heightened conflict between India and Pakistan, weighing on regional equities, and muted reaction to China’s recent rate cut and liquidity measures. Meanwhile, BMW reaffirmed its 2025 outlook, predicting tariffs on global vehicle imports may ease by July.
Investor Sentiment and Market Trends
Gold remains over $100 below its recent highs, and Brent crude futures steadied at $62.74 a barrel, having declined around 16% since recent tariff announcements. The euro hovered above $1.13 as Germany elected conservative leader Friedrich Merz as chancellor after a surprising initial defeat.
“The easing of trade strains supports the dollar.”
– Commonwealth Bank of Australia
