Chancellor Rachel Reeves intervened on Tuesday to address investor concerns following a global stock market sell-off attributed to recent US trade tariffs.

In a statement to parliament, Reeves confirmed that she had communicated with Andrew Bailey, the governor of the Bank of England, who reassured her that "markets are functioning effectively and that our banking system is resilient."

On the same day, stock markets in both the United States and Europe experienced positive movements.

The US Treasury Secretary, Scott Bessent, expressed optimism that the United States could negotiate favorable deals with its trading partners, contributing to renewed investor confidence.

The S&P 500 index increased by 3.3% or 169 points, reaching 5,232 points, while the Dow Jones Industrial Average rose by 3.6%, gaining 1,380 points to settle at 39,346 points.

The tech-focused Nasdaq index saw a 3.7% increase.

In Europe, London's FTSE 100 index climbed by 152 points, up 2%, to 7,854 points, with Germany’s DAX index rising by 1.5% and France’s CAC index increasing by 1.4%.

The broader European Stoxx 600 index rose by 1.7%.

Amid these developments, Reeves reiterated that a trade war "is in nobody's interest" and indicated that the UK government is actively pursuing negotiations for a new trade deal with the US. She is scheduled to meet with Bessent shortly and mentioned recent discussions with counterparts from Canada, Australia, Ireland, France, Spain, and the European Commission, emphasizing efforts to reduce global trade barriers.

Reeves is also set to engage with the Indian government to further these discussions.

While some market indicators showed signs of stabilization, responses in Asia were mixed.

Tokyo's Nikkei index recovered by 5.6%, and Hong Kong's Hang Seng index increased by 1.6% following a significant drop earlier in the week.

Conversely, South Korea’s Kospi index closed up 0.5%, while Taiwan’s TWII index fell by 5%, marking its worst daily decline on record due to heavy reliance on chip exports, which faced a 32% US duty.

Tensions remained high, particularly as the Chinese government warned it would "fight to the end" if the US escalated the trade conflict.

The Chinese Commerce Ministry vowed to implement countermeasures, asserting that they would not relent if the US pursued further tariffs.

Additionally, the European Commission revealed that it had proposed a "zero-for-zero" tariff deal on vehicles and industrial products to the US weeks prior to Trump's imposition of tariffs, indicating that the EU is still open to negotiations.

Amid these unfolding events, investment analysts noted the need for clarity in trade relations.

Matt Britzman, a senior equity analyst, remarked that while the positive movements in European indices were encouraging, they should not be perceived as a definitive resolution to ongoing trade tensions.

He highlighted that developments regarding US-Japan trade discussions could represent a potential pathway to stabilizing markets.

In related economic forecasts, Goldman Sachs predicted that Brent crude oil prices could drop below $40 per barrel in an extreme global economic scenario, following recent lows that saw oil prices fall to less than $64 a barrel before a slight rebound of 0.1% on Tuesday.