Happy Wednesday and welcome to your morning wrap of the latest business and political headlines from around the world.
First up, Reuters reports that the International Monetary Fund has slashed its growth forecasts for the United States, China and most other countries, citing the effect of US tariffs and the risk of rising trade tensions.
The IMF has released an update of its World Economic Outlook, in which it cut its forecast for global growth by 50 basis points to 2.8% for 2025. US Growth was downgraded by 90 basis points to 1.8% in 2025, and by 40 basis points to 1.7% in 2026.
China’s growth forecast was lowered by 60 basis points to 4%, while the outlook for Europe is projected to slow to 0.8% in 2025 and 1.2% in 2026.
"We are entering a new era as the global economic system that has operated for the last 80 years is being reset," IMF chief economist Pierre-Olivier Gourinchas told reporters.
Weaker growth prospects had lowered demand for the US dollar, but he said the adjustment in currency markets and portfolio rebalancing to date had been orderly.
"We are not seeing a stampede or a run to the exits," Gourinchas said. "We're not concerned at this stage about the resilience of the international monetary system. It would take something much bigger than this."
In other economic news, US Treasury Secretary Scott Bessent said he expects “there will be a de-escalation” in Donald Trump’s trade war with China in the “very near future”, reports CNBC.
“No one thinks the current status quo is sustainable”, with tariffs at the current rates, he said.
Bessent made the comments at a closed-door investment summit in Washington DC hosted by JPMorgan Chase.
He also added that negotiations with China were likely to be “a slog”.
Following his comments, White House press secretary Karoline Leavitt said Trump wanted people to know the US was doing well regarding a potential trade deal with China. However, it is not clear whether those negotiations have actually begun.
Regardless, Bessent’s chatter on tariffs was enough to fuel a strong rally on Wall Street.
The main indices were all up between 2.5% and 2.6%, while the yield on the US 10-Year Treasury fell 1.8 basis points to 4.387%.
Bitcoin has also staged a rally, rising above US$91,000 for the first time since the beginning of March.
Argent Capital Management portfolio manager Jed Ellerbroek told CNBC the market was clearly responding to Bessent’s comments.
“The market will interpret that as good news that will cause it to rally and adjust its expectations for where the final resting place for this trade war is in a couple of months.”
To India, where the BBC reports that at least two dozen people have been killed after gunmen opened fire on a group of domestic tourists visiting a popular spot in Indian-administered Kashmir.
The attack took place in the picturesque Himalayan town of Pahalgam.
No group has claimed responsibility for the attack. There has been a long-running insurgency in the Muslim-majority region since 1989, although violence has waned in recent years.
The region’s chief minister, Omar Abdullah, said the attack was “much larger than anything we’ve seen directed at civilians in recent years”.
Meanwhile, Indian Prime Minister Narendra Modi said the perpetrators would be “brought to justice”.
Moving to Rome, where tens of thousands of people are flocking to the city to mark the death of Pope Francis, who died on Monday, aged 88, after an extended health battle.
His funeral will take place at the Vatican on Saturday morning, with Prince William among those due to attend alongside dozens of other world leaders.
Overnight, the Vatican shared images of the Pope in an open coffin.
Pope Francis.
Finally this morning, Reuters reports that Tesla short sellers are up an estimated US$11.5 billion so far this year, according to a report from data and technology analytics firm S3 Partners.
Tesla’s shares have fallen 40% this year as the company has lost market share to Chinese rivals and perceptions of brand damage due to Elon Musk’s political association with Donald Trump.
Investors who sell securities short borrow shares and then sell them, betting that the stock will fall so they can buy the shares back at a lower price to return them to the lender and pocket the difference.
S3 managing director Matthew Unterman said Tesla was the most profitable short globally, with a 10 million or 15% increase in shares sold short this year.
"With short interest climbing and sentiment deteriorating, Tesla's post-earnings path hinges on results and guidance clarity," wrote Unterman.
Wedbush analyst Dan Ives, regarded as a Tesla bull, said earlier this month that Musk should either "exit stage left" or step back from his political role in the US Department of Government Efficiency (DOGE) and return his focus to Tesla.
Tesla’s latest quarterly results will be released after the market close this morning.
