Stocks and the dollar rose yesterday as the head of the Federal Reserve said the economic outlook remains strong despite uncertainty over trade policy.
Upbeat about the US economy, Federal Reserve chief Jerome Powell began two days of congressional testimony yesterday by indicating the central bank will continue to raise rates gradually.
US stocks reversed modest losses from the start of trading, while the dollar strengthened. The drop in the value of the euro and pound helped push European stocks into positive territory as well.
“European markets have moved higher in unison today, as the decline in European currencies help drive gains for stocks,” said IG market analyst Joshua Mahony.
Stock markets mostly slid across Asia, led by share price falls for the energy sector one day after oil prices plunged on excess supply concerns.
Brent crude hit another three-month low yesterday, at $71.35 per barrel, before recovering.
While painting a positive picture about the US economy, Powell acknowledged that it was “difficult to predict the ultimate outcome of current discussions over trade policy,” a clear reference to the aggressive tariff policies adopted by President Donald Trump against China and many US trading partners.
The International Monetary fund warned on Monday escalating trade tensions and tariff threats, if carried out, could disrupt global growth and derail investments.
Fears about a China-US trade war continue to nag investors, with both sides filing counter-complaints at the World Trade Organisation after recently imposing and threatening further tariffs on billions of dollars worth of goods.
Yesterday, the EU and Japan signed a sweeping free trade deal that officials called a “clear message” against protectionism, as Washington imposes controversial tariffs and threatens a trade war.
The huge deal was signed as US President Donald Trump unsettles allies and provokes rivals with his aggressive “America First” trade policy.
Both the EU and Japan have been hit with new US tariffs despite their long-standing alliances with Washington.
Markets’ attention is also on the start of the corporate earnings season, with Netflix disappointing analysts on growth in the number of its subscribers in data released late Monday still affecting markets. 
Its shares plunged nearly 13% in early trading yesterday before recovering some of the losses.
The streaming service said membership grew 5.2mn to 130mn, a million shy of what the company had forecast.
Shares in investment bank Goldman Sachs dropped 1.3% after reporting a 44% jump in second-quarter earnings to $2.3bn and announcing that David Solomon would succeed Lloyd Blankfein as chief executive.
In Germany, shares in Thyssenkrupp jumped 9.1% as the departure of another key executive boosted chances that activist investors will succeed in their effort to split apart the industrial conglomerate.


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