Chancellor Rachel Reeves has moved to reassure financial markets following last week’s sharp global sell-off, sparked by US President Donald Trump’s sweeping tariff announcements. Her remarks in Parliament on Tuesday coincided with a partial rebound in both US and European stock indices.
Reeves told MPs she had spoken with Bank of England Governor Andrew Bailey, who confirmed that “markets are functioning effectively and that our banking system is resilient.”
The chancellor reiterated that a trade war was “in nobody’s interest” and said the UK was actively working to secure a new agreement with the United States. She confirmed she would soon meet with US Treasury Secretary Scott Bessent, who earlier offered a glimmer of optimism by saying the US could reach “some good deals” with global partners.
Stock markets reacted positively to Bessent’s comments. Wall Street’s S&P 500 surged by 3.3% (up 169 points to 5,232), the Dow Jones Industrial Average climbed 3.6% (1,380 points to 39,346), and the Nasdaq rose 3.7%. In Europe, London’s FTSE 100 gained 2% to 7,854, while Germany’s DAX and France’s CAC rose by 1.5% and 1.4% respectively.
Reeves noted that the UK has been coordinating with key international allies, including officials from Canada, Australia, Ireland, France, Spain, and the European Commission, in a bid to lower global trade barriers. She is also set to meet with representatives from the Indian government on Wednesday.
Despite growing concerns, Reeves declined calls from the Liberal Democrats to support a “buy British” campaign, warning it could send the wrong signal internationally. “Everyone will make their own decisions,” she said. “What we don’t want is a trade war, with Britain becoming inward-looking.”
Asian markets also showed signs of stabilisation, following the worst drops in decades across several indices. Japan’s Nikkei led the regional recovery with a 5.6% gain. Hong Kong’s Hang Seng index bounced back by 1.6%, and South Korea’s Kospi closed 0.5% higher after earlier gains. However, Taiwan’s TWII index continued to fall, closing down 5%, due to its reliance on chip exports and the newly imposed 32% US duty.
Tensions between Washington and Beijing remain high. China has vowed to “fight to the end” if Trump escalates the trade war further, following his threat to impose a 50% tariff hike unless China rolls back its retaliatory measures.
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