MSCI's all-country equity index hit a record high on Wednesday, a whopping 23% surge from the intraday trough of April 7 hit after the initial U.S. tariff sweep. The world index is now almost 6% higher for the year.
Wall Street continues to lag, but the S&P 500 is positive again for the year and the Nasdaq is within a whisker of breaking even in 2025. Stock index futures are up again ahead of today's bell, with stocks in Europe and Asia also rising smartly.
By contrast, U.S. Treasuries and the dollar both fell back, with the long bond yield now back near 5% and the euro briefly re-capturing $1.14 against the greenback.
But is the coast really that clear for stocks?
Part of the week's seeming optimism hinges on hopes that the fast approaching deadline on the 90-day pause in U.S. 'reciprocal' tariffs will focus minds and deliver deals. Despite the hoopla over a UK agreement last month, no deals have been signed and sealed so far.
Central to hopes of some trade detente is the planned phone call between President Donald Trump and China's President Xi Jinping. The White House claims it's happening this week, though it's unclear exactly when. And Trump posted on Wednesday that Xi was "very tough and extremely hard to make a deal with."
Washington officially doubled its tariffs on steel and aluminum imports on Wednesday, exempting Britain for now. The Trump administration also expects negotiating countries to make "best offers" by today to avoid additional import levies kicking back in next month.
Maros Sefcovic, the trade negotiator for the European Union, met U.S. Trade Representative Jamieson Greer in Paris on Wednesday, with the 27-nation bloc set to make its case for cutting or eliminating threatened tariffs on European imports.
But concern about auto sector disruption from the U.S.-China trade standoff has also risen by several notches.
Global automakers joined U.S. counterparts to complain that restrictions by China on exports of rare earth alloys, mixtures and magnets could cause production delays and factory outages without a quick solution.
Trump, meantime, is set to use emergency powers and slash legal requirements relating to a law aimed at lifting U.S. production of critical minerals and weapons, according to a document seen by Reuters.
But despite the very real disruption in manufacturing, there were other signs that the wider U.S. economy is weathering the storm reasonably well, with job openings unexpectedly increasing in April as a week of labor market updates unfolds.
That helped Wall Street stocks move higher on Tuesday, but the rally is mostly being driven by Big Tech once again. Information technology stocks rose 1.5%, boosted by 2.9% gains by Nvidia, which is back to being the world's most valuable firm. Chipmaker Broadcom hit a fresh record high after the company said it has begun to ship its latest networking chip.
Service sector survey readouts for May are due later, and European equivalents out earlier showed upward revisions to earlier flash readings.
European stocks and the euro were higher ahead of the expected European Central Bank rate cut on Thursday, now seen as a done deal as euro zone inflation fell back below target in May.
Markets reckon there's a 50-50 chance the Bank of Canada also cuts rates later today. The Canadian dollar held firm ahead of the decision.
Elsewhere, South Korea's stocks jumped almost 3% and the won rallied 1% after the victory of liberal candidate Lee Jae-myung in the presidential election there.
And now for today's column, where I consider how a global reserve holdings shift in favor of the euro could generate massive amounts of additional investment in euro assets, even if the euro doesn't supplant the dollar.
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