Asian, European Markets Gain While U.S. Stocks Dip Amid Uncertainty Over Trade Talks

Global stock markets saw another wave of optimism this week, with European and Asian equities eyeing a second straight week of gains. Meanwhile, the U.S. dollar, after a rough month, finally found its footing. The main driver? Renewed hopes that the U.S. and China are easing back from the edge of their trade war.

Investors have taken comfort in signs that both Washington and Beijing are willing to tone down the rhetoric. China recently announced it would exempt some American goods from its steep 125% tariffs—one of the clearest signs yet that Beijing is responding to economic pressures and seeking to cool tensions.

In Europe, the STOXX index rose modestly by 0.27%, reflecting cautious optimism. Asian markets also rallied, with Hong Kong’s Hang Seng up 1% and Japan’s Nikkei jumping 1.8%, recouping all its losses since U.S. President Donald Trump’s historic tariff announcements.

Shortly after U.S. markets opened, futures turned slightly negative. A newly published interview with President Trump in Time Magazine reignited some nerves. Trump described “total victory” as a scenario where steep tariffs remain in place a year from now, casting a shadow over hopes for a near-term resolution.

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Adding to the confusion, Trump also claimed that Chinese President Xi Jinping had personally called him to discuss a deal—contradicting statements from Chinese officials a day earlier.

Still, positive corporate news gave markets a bit of a boost. Tech titan Alphabet (Google’s parent company) beat earnings expectations and reaffirmed its ambitious investments in artificial intelligence. That drove its stock up nearly 5% in after-hours trading, dragging up other tech peers along with it.

The U.S. dollar, which had taken a hit from recent volatility and capital outflows, gained some ground this week, trading around $1.1354 against the euro and 143.3 yen. The dollar index climbed 0.2% for the week, reflecting improved investor sentiment.

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“There’s a sense that the worst of the tariff threats may be behind us,” said Eli Lee, Chief Investment Strategist at Bank of Singapore. “Both sides seem to have drawn a line on further escalations.”

Gold prices, a traditional safe haven, slipped 1% and are on track for a weekly loss—signaling that traders may be dialing back their risk aversion. Yet, major U.S. companies are still flashing warning signs. Procter & Gamble, PepsiCo, Chipotle, and American Airlines all slashed or withdrew forecasts due to growing consumer uncertainty.

Analysts at Phillip Securities in Singapore also pointed to a worrying trend: the Gold/S&P 500 ratio—a marker of investor anxiety—remains at its highest level since the 2020 pandemic-driven market crash.

Even with markets bouncing back, the mood remains fragile. Investors are cautiously optimistic, but wary. The dance between global economies and political brinksmanship continues. For now, a fragile truce in the U.S.-China trade war is keeping hopes alive—but the markets know better than to let their guard down.