Moving away from the sea of red, global financial markets had a gala time on Thursday after Trump announced a 90-day pause on several reciprocal tariffs imposed on trade partners.
Wall Street indices--the S&P 500, Dow Jones and Nasdaq Composite skyrocketed 8-12% overnight, while Japan's Nikkei 225 and South Korea's Kospi climbed 6-8% today
Moving away from the sea of red, global financial markets had a gala time on Thursday after Trump announced a 90-day pause on several reciprocal tariffs imposed on trade partners.
The announcement spurred a historic rally on Wall Street overnight, when the S&P 500 skyrocketed more than 9%, its third-biggest single day gain since World War II. The Dow Jones clocked in gains of nearly 8%, steepest since March 2020 while the tech-heavy Nasdaq Composite logged its largest single-day jump since January 2001 and second-best day ever. The rally was banked on high trading volumes which stood at a record high.
The optimism seen on Wall Street also maneuvered its way through Asian markets, where Japan’s Nikkei 225 soared over 8% and South Korea’s Kospi climbed more than 5%. Indian equity markets remained closed for a holiday today, but may open on a positive note in the next session, provided that there are no new negative developments on the tariff front.
To allow time for trade negotiations, the US President announced a reprieve in the imposition of reciprocal tariffs on most countries, allowing only a blanket 10% tariff for a 90-day period. The announcement came just hours after the aggressive reciprocal tariffs came into action o April 9.
On April 2, President Trump announced plans to impose a baseline tariff rate of 10% on imports from over 180 countries. Within these 180 nations, 90 nations faced additional steeper, reciprocal tariffs that came into effect on Wednesday, with rates ranging from 11% to 50%.
While reciprocal tariffs on most trade partners were paused for the moment, the tensions between China and the US intensified. The President raised tariffs on Chinese imports to a staggering 125% after China, the US’ third-largest trading partner had earlier hit back with an 84% tariff on US imports.
That’s not it, the swords of uncertainty continue to hang over Trump’s aggressive tariff plans. There’s looming fears over how much of these tariffs will actually make it official and how other countries might respond with retaliatory actions. Much like China, the European Union also walked the talk and slapped levies of upto 25% on US goods worth around 20bn euros in retaliation for US duties on steel and aluminium imports imposed last month.
If more countries join the wagon of retaliatory actions, the global economy may face severe disruptions which can have far reaching implications across the globe. So while the markets rejoiced today, it still is too soon to read much into this celebration.
Trump’s tariff onslaught has kept global financial markets on edge since the start of April. Suffering sharp losses after Trump first announced reciprocal tariffs, markets across economies have struggled with high volatility, swinging between sharp losses and intermittent recoveries. Trump’s constant back and forth stance on tariffs has also ushered uncertainty, leaving the road ahead unclear.