U.S. markets and stock ETFs climbed Wednesday off the heels of a global rally as political clarity in Hong Kong and the United Kingdom helped ease uncertainty and unwind some of the previous risk-off trade.

On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) increased 1.4%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 0.9% and SPDR S&P 500 ETF (NYSEArca: SPY) was 1.0% higher.

Hong Kong markets jumped after the city’s chief executive, Carrie Lam, said the extradition bill will be withdrawn after months-long demonstrations gripped the territory’s economy, the Wall Street Journal reports.

Meanwhile, British markets strengthened after Parliament the night prior took steps to prevent a no-deal Brexit, assuaging investor fears that the United Kingdom could leave the European Union without a deal.

Risk-On Sentiment Support

Brad McMillan, Chief Investment Officer of Commonwealth Financial Network, argued that the risk-on sentiment was being supported by a material reduction in risk in Hong Kong and Britain.

“Markets have been kind of pricing in the worst, and now people are thinking, ‘Maybe the world isn’t ending just yet’,” McMillan told the WSJ.

“This is a sentiment-driven market and whenever you get news like this, while it may not directly impact the U.S., it causes a ripple effect,” Ryan Nauman, market strategist at Informa Financial Intelligence, told Reuters.

Further bolstering U.S. markets on Wednesday, Federal Reserve officials suggested that they are open to additional interest rate cuts to support the economy. The Federal Reserve President John Williams said the economy was in good place and he was ready to “act as appropriate” to avoid a downturn.

Related: Will U.S. Equities Benefit As Hong Kong Protests Ease? 

Trade data revealed a mixed bag on the U.S. economy, with a healthy consumer sector offset by weakness in manufacturing. According to the Commerce Department, the U.S. trade deficit in goods and services slipped to $53.99 billion in July.

“The strong labor market and consumer is what’s driving economic growth and if we start seeing cracks in the labor market, that would give me pause that a recession is on the horizon,” Nauman added.

For more information on the markets, visit our current affairs category.

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