Global markets are on a rollercoaster, and it is not for the faint-hearted. While Wall Street futures dipped into the red on Thursday, stock markets in Asia and Europe surged, lifted by a surprising decision from US President Donald Trump to pause sweeping new tariffs.
However, the relief comes with a catch, that is, China is not part of the deal.
Futures tied to the Dow Jones Industrial Average fell by 1.6%, while S&P 500 futures dropped over 2%. Nasdaq 100 futures were down by 2.6%, indicating that American investors remain wary, despite Wednesday’s gains.
Trump’s 90-Day tariff pause – But not for China
In a dramatic turnaround, Trump announced a 90-day pause on his tariff policy, just a day after global markets were rattled by fears of a trade war. He announced that over 75 countries had chosen negotiation over retaliation, making him lower the proposed tariffs for most nations to 10% during the pause period.
But for China, there was no such relief. The President declared an immediate hike in tariffs on Chinese goods, from 104% to a whopping 125%.
Asian Markets celebrate the temporary reprieve
Asian equity markets were quick to react, and the bounce was powerful. After days of steep losses, investors in the region welcomed the breathing room.
In Japan, the Nikkei 225 jumped 9%, at 34,609, its biggest single-day gain since August. The Topix index also surged 8%. Over in South Korea, the Kospi index soared by nearly 7%, marking its strongest performance in five years.
European markets trade strong, Banks and Tech lead the charge
The optimism was not just limited to Asia. European markets opened sharply higher on Thursday, continuing the global rally. The pan-European Stoxx 600 index surged nearly 7%, with every sector in the green.
Banking stocks led the way, climbing 10%, followed by technology firms nearly at 10%, and industrial shares rising by 9%. This came as a relief after the index had ended the previous session down 3.5%, at its lowest level since January 2024.
Relief rally or temporary calm?
Despite the global surge, caution continues to linger. Wall Street’s future contracts turning red in a way points out that investors are not fully convinced. The exclusion of China from the tariff pause raises the possibility of deeper trade tensions in the near future.
Bond markets also are showing signs of nervousness. Yields on 10-year US Treasuries dropped, reversing a 34-basis-point spike earlier in the week.