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Global Markets React to U.S. Tariff Hold

World markets experienced a significant upswing on Thursday, particularly in Japan, where the benchmark index surged by over 9%. This rally was driven by President Trump’s announcement to suspend sharp tariff increases for a 90-day period, although China was notably excluded from this pause. Concurrently, U.S. futures began the day on a downward trajectory, alongside a decline in oil prices.

As reported by Yahoo Finance, S&P 500 futures fell by 1.71% by 4:30 a.m. EDT, while futures for the Dow Jones Industrial Average decreased by 1.32%, and the Nasdaq saw a dip of 2.07%.

In Europe, Germany’s DAX saw an initial increase of over 8%, stabilizing later with a 7.5% rise to 21,141.53. France’s CAC 40 also climbed 7.2% to 7,360.23, and the UK’s FTSE 100 surged 5.4% to 8,090.02. Meanwhile, Chinese markets experienced more tempered gains due to the ongoing escalation in tariffs between the two nations.

Market analysts anticipated a rebound following a particularly strong day for U.S. stocks on Wednesday, as traders reacted positively to Trump’s tariff announcement, creating a wave of optimism.

On Thursday, Japan’s Nikkei 225 climbed a remarkable 9.1%, closing at 34,609.00. Australia’s S&P/ASX 200 also performed well, surging 4.5% to 7,709.60. South Korea’s Kospi increased by 6.6% to 2,445.06, and Hong Kong’s Hang Seng added 2.4% to reach 20,750.65. The Shanghai Composite saw a modest rise of 1.2%, closing at 3,223.64.

Stephen Innes, managing partner at SPI Asset Management, noted the shift in investor sentiment, stating, “There has been a transition from fear to euphoria. It appears that the risks are now more manageable, especially as concerns about a global recession diminish and Asia’s exporters feel relieved.”

In the U.S., the S&P 500 experienced an impressive spike of 9.5%, amounting to gains that would typically be celebrated as a successful year in the market. Earlier, it had shown signs of decline due to fears that Trump’s trade policies might lead the global economy into recession. The turning point was a message from Trump, shared via social media, that many investors had been eager to see.

The President stated, “I have authorized a 90-day PAUSE,” acknowledging more than 75 nations that had engaged in trade negotiations without responding to the latest tariff hikes. Treasury Secretary Scott Bessent later clarified that while Trump would pause several “reciprocal” tariffs for most major trading partners, the 10% tariff on nearly all global imports would remain in effect.

China remained a significant outlier; Trump indicated plans to escalate tariffs on Chinese goods, potentially as high as 125%. This scenario suggests further volatility for financial markets, with the ongoing trade dispute between the U.S. and China posing risks of economic damage. Following Trump’s tariff announcement, U.S. stocks remained lower than their values just a week prior, when he declared a “Liberation Day” for international tariffs.

Despite the uncertainty surrounding trade tensions, Wall Street ended with a positive outlook. The Dow jumped 2,962 points—7.9% higher—while the Nasdaq composite soared by 12.2%. The S&P 500 achieved its third-best daily performance since 1940, alleviating some pressure from fears regarding Trump’s policies and their impact on the market.

This surge provided relief to investors who were concerned Trump’s decisions might disregard the economic repercussions affecting the U.S. stock market. Before this rally, the S&P 500 was hovering nearly 19% below its record set less than two months earlier.

The rebound in the S&P 500 also moved the index away from the brink of a “bear market,” a term used when stocks fall by 20% or more from their peak. Currently, the S&P 500 is down 11.2% from its highest point.

Additionally, Wall Street was positively influenced by a successful U.S. Treasury auction on Wednesday, which eased earlier worries about rising Treasury yields. Increases in these yields generally indicate market stress, impacting mortgage rates and loans for households and businesses. Such movement is remarkable, as Treasury yields typically drop during turbulent market periods due to their status as relatively safe investments.

The yield on the 10-year Treasury had risen sharply earlier in the week but fell back to 4.34% after Trump’s announcement and the Treasury auction, a decline from 4.26% late the previous day and significantly up from 4.01% at the end of the last week.

In commodities trading, benchmark U.S. crude oil fell by 52 cents to $61.83 per barrel, while Brent crude, the international standard, decreased by 70 cents to $64.78 per barrel. Analysts interpret falling oil prices as a signal of anticipated slowdowns in economic activity and oil demand.

In currency exchange, the U.S. dollar dropped to 146.83 Japanese yen, down from 147.38, while the euro traded at $1.0988, an increase from $1.0954.

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