Stock markets were enjoying a much-needed relief rally in Asia on Wednesday after US President Donald Trump said he had no plans to fire the head of the Federal Reserve, and hinted at lower tariffs for China.

The dollar jumped sharply across the board after Trump walked back the threats to dismiss Fed Chair Jerome Powell that had badly shaken investor confidence in US assets, although those gains faded somewhat as the day progressed.

Trump also reiterated he wanted to do a deal with China where tariffs would not be anywhere near 145 percent, adding that he would set the terms of a deal if Beijing did not enter talks.

US Treasury Secretary Scott Bessent was reported earlier on Tuesday saying that he believes there will be a de-escalation in US-China trade tensions, but negotiations with Beijing have not yet started and would be a "slog".

"While it is still early days, the mood in the market is evidently shifting and what was a strong 'sell America' vibe flowing through markets yesterday has in part reversed," said Chris Weston, head of research at broker Pepperstone.

"Markets are becoming ever more conditioned to the President shooting from the hip and then reversing the stance like it was never a big issue."

Investors reacted by buying back into beaten-down stocks. Japan's Nikkei jumped 1.7 percent, while South Korea's main index rose 1.4 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan vaulted 1.9 percent.

Wall Street extended an overnight bounce as S&P 500 futures climbed 1.4 percent and Nasdaq futures 1.7 percent. Sentiment had been helped by some upbeat earnings results, and even Tesla rebounded 5 percent after the bell despite missing forecasts.

Part of that was Tesla boss Elon Musk's assertion in a call with analysts that he would significantly reduce his involvement in work at the Department of Government Efficiency from next month to focus more on his many companies.

The dollar also recouped a little of its recent steep losses, rising 0.2 percent on the Japanese yen to 141.77 , away from a seven-month low of 139.89. It earlier jumped as much as 1.1 percent.

The dollar rose 0.4 percent on the Swiss franc to 0.8218 , and the euro slipped 0.2% to $1.1399 .

Longer-dated Treasuries rallied as Trump's reversal on Powell seemed to ease the threat to US monetary and fiscal credibility.

Investors have been worried that White House pressure to cut interest rates would risk fuelling inflation just as Trump's tariffs boost prices.

Yields on 30-year bonds fell 8 basis points to 4.795 percent, while two-year yields edged up 1 basis point to 3.820 percent, flattening the yield curve.

Fed fund futures ran into selling as investors scaled back the extent of rate cuts expected by year-end to around 81 basis points.

"Thanks again to a meltdown in markets and - one assumes - another intervention from Treasury Secretary Scott Bessent about the damage likely to be incurred if Fed independence is threatened - President Trump has backflipped," said Kyle Rodda, an analyst at Capital.com.

"Ultimately, a sustained recovery in risk assets, as well as the US dollar, relies, realistically, on deals being done between the US and its major trading partners, especially China," Rodda said.

Tariffs are still seen dragging on the global economy as the International Monetary Fund on Tuesday slashed its forecasts for growth in the United States, China and most countries.

Still, the general improvement in risk sentiment helped oil prices recover some of their hefty losses with gains of around 0.9 percent on Tuesday.

Early on Wednesday, Brent rose a further 60 cents to $68.04 a barrel, while US crude added 60 cents to $64.27 per barrel.

Safe-haven gold ran into profit-taking and slipped 1.2 percent to $3,340 an ounce , off an all-time peak of $3,500.