Global markets rebound after tariff storm pause
The financial world breathed a sigh of relief on Thursday as stock markets surged higher and the chaotic bond selloff finally slowed down. The reason was a surprise initiative by U.S. President Donald Trump: he announced a temporary relaxation of the massive tariffs that he recently imposed on dozens of countries.
Euphoria gives way to anxiety
However, the overnight momentum for U.S. stocks and the dollar soon faded. Investors began to realize that the respite may be short-lived as trade tensions between Washington and Beijing only escalate. In addition, the White House's sudden change in tariff policy has caused confusion and concern in the markets.
Trump pressed pause
After prolonged pressure on global markets, which led to the loss of trillions of dollars in capitalization and weakening of the US dollar and Treasuries, Trump made an unexpected move. On Wednesday, he announced a 90-day delay in the introduction of some new tariffs - this became a turning point and caused an explosion of optimism among investors.
Asia and Europe react violently
This news immediately affected the dynamics of the Asian session. European futures jumped: EUROSTOXX 50 and DAX added about 8%, FTSE demonstrated growth of 5.4%. Japanese Nikkei index also did not stand aside - its growth exceeded 8%.
US indices roll back
Despite a surge of optimism yesterday, Nasdaq futures fell more than 1%, while the S&P 500 lost about 0.8%. This contrasts with the impressive gains recorded during the previous session, when both indices posted their largest daily gains in more than a decade.
Dollar retreats from highs
The US currency also declined, with the dollar down 0.8% against the Japanese yen and 0.6% against the Swiss franc. Safe-haven currencies once again confirmed their status as protective assets, preventing the dollar from maintaining the positions it had achieved earlier.
Indulgences with caveats
While Donald Trump's announcement of tariff easing has given hope to markets, it is too early to relax. The White House clarified that the base rate of 10% on most foreign goods entering the US will remain. The easing of measures also does not apply to the existing duties on cars, steel and aluminum - these duties remain in full force.
China - in the crosshairs again
At the same time, the American administration has sharply increased pressure on Beijing. Rates on Chinese imports will increase from 104% to an impressive 125%. This decision comes into effect immediately and becomes a new round of trade conflict between the two economic giants.
Beijing responds symmetrically
China's response was not long in coming. On Wednesday, the Chinese authorities announced an increase in duties on American goods to 84%. In addition, restrictions were imposed on the activities of 18 American companies - primarily from the defense industry and related industries.
Investors are hoping for a reprieve
And yet, despite mutual aggression, world markets are choosing to look through rose-colored glasses. Most market participants apparently preferred to focus on the 90-day reprieve for dozens of countries proposed by Trump. For now, the temporary truce outweighs the potential risks.
Eastern markets react cautiously
Asian markets ended the day higher. China's CSI300 index, which tracks mainland blue chips, rose 1%. Hong Kong's Hang Seng posted a 2.4% gain, reflecting the relative optimism of investors in the region.
China's currency under pressure
However, the foreign exchange market paints a different picture. The onshore yuan fell to its lowest since December 2007, reaching 7.3518 per dollar. This is a worrying sign of underlying instability amid the trade confrontation.
China's central bank acts cautiously
The People's Bank of China also showed restraint. On Thursday, it set the base exchange rate — a benchmark for the yuan within a 2% range — at its lowest since September 2023. This move is clearly aimed at containing devaluation pressures and maintaining control over the exchange rate.
Bonds: The storm is easing
The bond market chaos that engulfed it earlier in the week has also begun to subside. Although investors are still extremely cautious, there are no signs of widespread panic. Markets may be looking for a foothold in a short-term tariff truce.
The yield on 10-year U.S. Treasury notes fell to 4.2908% after hitting a high of 4.5150% the previous day. The rate has fallen by about 13 basis points over the session, signaling an easing of recent pressure.
Market panic: Are lessons from the pandemic returning?
Amid a sharp sell-off in government bonds that reminded market participants of the panic "races to cash" during the COVID-19 era, concerns about the stability of the U.S. debt market, the largest and most liquid in the world, have resurfaced. Investors do not rule out that the new wave of turbulence may be just the beginning.
The Fed is in no rush to save the market
The US Federal Reserve is not planning to intervene yet. According to fresh minutes of the mid-March meeting, published on Wednesday, regulators expect that a possible increase in tariffs will accelerate inflation. At the same time, the Fed is concerned that the Trump administration's aggressive foreign economic strategy could undermine GDP growth.
Rate cut rates are melting
Investors are adjusting expectations. At the beginning of the week, the market assumed that the Fed could ease policy by more than 100 basis points by the end of the year. However, now only about 80 are priced in, a clear signal that confidence in the upcoming easing of monetary policy has weakened.
Oil weakens amid tensions
Oil prices went down. The deepening conflict between the US and China is again raising concerns about global demand for commodities. Investors are starting to price in scenarios of a decline in industrial activity and trade.
Gold: A Safe Haven Amid Turbulence
In contrast to oil, gold continues to strengthen its position. The precious metal rose by 1.5%, reaching $3,128.92 per ounce. Growing interest in "safe haven" assets indicates growing nervousness among investors.
Europe has moved to growth
European stock exchanges are seeing a sharp rise. Stocks have confidently gone up after President Trump announced an emergency suspension of new tariffs for 90 days. This was a tangible relief for markets battered by several consecutive days of declines.
Tariff pause: a surprise at the last minute
Notably, the suspension of "punitive" tariffs occurred literally a day after they officially came into effect. However, the US administration maintains the main 10% rate for almost all imported goods, which continues to create a tense backdrop for global trade.
European Stock Exchanges Recover
Market panic has given way to a powerful rebound. The pan-European STOXX 600 index gained a massive 7.2% by 07:09 GMT, recovering from a loss of more than 12% since early April, when the US imposed retaliatory tariffs. The gains were particularly pronounced in Germany, with the trade-sensitive DAX index jumping 8.1%.
Trump Raises Rates
But despite the temporary relief for many countries, the US president continues to increase the pressure on Beijing. The latest move — increasing tariffs on Chinese products to 125% — was a response to China's move to impose an 84% levy on US goods from April 10. The move signals that the trade war is far from over.
All sectors are rising, but the favorites are those that were hit hardest
The overall gains are across all sectors. Those who have been hit the hardest in recent weeks are feeling particularly confident: the banking sector jumped by 10.1%, mining stocks by 9.2%, and energy corporations by 9.3%. Such synchronized growth was made possible by a temporary tariff respite, which investors perceived as a respite in the trade standoff.
Bonds are starting to recover
The US Treasury bond market, which recently suffered one of the sharpest declines since the pandemic, is showing signs of stabilization. The anxiety caused by fears about the systemic risks of the largest debt market on the planet is gradually fading.
Tesco under pressure: profit in question
Amid the general optimism of the European stock market, not all companies are feeling confident. Shares of the British retail giant Tesco fell by 3.8% after publishing a forecast according to which the company's profit will most likely decline this year. Management attributes this to rising costs and an uncertain macroeconomic environment.
