Economic markets worldwide experienced a significant upturn on Thursday, catalyzed by President Donald Trump’s announcement to temporarily suspend tariff increases for 90 days. However, this reprieve conspicuously does not extend to China, which remains the focal point of trade tensions.
Germany’s DAX initially surged by more than 8% and later settled at a 7.5% increase to reach 21,141.53. Similarly, France’s CAC 40 climbed 7.2% to 7,360.23, while the UK’s FTSE 100 saw a 5.4% boost, hitting 8,090.02. Despite this optimism in Europe, U.S. futures slightly declined, and oil prices followed a downward trend. Meanwhile, Chinese stocks posted modest gains amid the ongoing tariff increases between China and the U.S. The S&P 500 futures and Dow Jones Industrial Average both saw minor decreases, further reflecting the market’s mixed sentiments.
Following one of the most outstanding days for U.S. stocks in history, analysts had anticipated Thursday’s bounce back. The global mood was undoubtedly lifted by Trump’s tariff decision, promising a short-term pause. Japan’s Nikkei 225 index prominently jumped 9.1%, reaching 34,609.00 upon opening. Australia’s S&P/ASX 200 rose 4.5% to 7,709.60, South Korea’s Kospi increased 6.6% to 2,445.06, and Hong Kong’s Hang Seng added 2.4% to 20,750.65, indicating widespread investor optimism. The Shanghai Composite saw a more conservative increase of 1.2%, ending at 3,223.64.
Commentary by SPI Asset Management’s Stephen Innes noted a shift from “fear to euphoria” among investors, emphasizing the reduced immediate risk and relief felt by Asian exporters despite the persistent tariffs applied to China. On Wall Street, the S&P 500 saw a remarkable jump of 9.5%, a milestone generally associated with annual gains, as previous fears of a global recession subsided with Trump’s announcement. The day’s dramatic turnaround was heralded by Trump’s statement of a 90-day suspension on tariffs, easing tensions for investors worldwide.
Despite this relief, the S&P 500 remains below its previous highs, reflecting ongoing concerns over the broader trade conflict. Trump’s tariffs make China a notable exception, with tariffs escalating to 125% on Chinese goods, illustrating the trade war’s impact between the two economic giants. Historically, U.S. stocks have tumbled since the announcement of Trump’s “Liberation Day,” signifying global tariffs. Yet, Wall Street’s upbeat focus was on the momentary pause, with the Dow Jones industrial average leaping 7.9% and the Nasdaq composite a remarkable 12.2%.
Investors had anticipated that President Trump, known for celebrating stock market gains, would reconsider policies detrimental to market stability. Noteworthy was the S&P 500’s escape from looming bear market status—a market decline of 20%—as the index rose from being 19% below record levels to 11.2%. The stock market’s renewed confidence also related to a stable auction of U.S. Treasuries, which had previously unsettled markets with rising yields. Prior concerns were alleviated once Trump indicated his awareness of heightened market stresses.
Yields on the 10-year Treasury edged down to 4.34% post-announcement and Treasury auctions, a recovery from earlier highs and a marked rise from preceding weeks. Reflecting on commodity trading, U.S. crude oil dipped 81 cents to $61.54 per barrel, while Brent sustained a decline of 93 cents to $64.55. In the currency realm, the U.S. dollar fell to 146.77 Japanese yen, with the euro strengthening to $1.0986.