Asian and European shares surged and a manic bond selloff stabilised today after US President Donald Trump said he would temporarily lower the hefty duties he had just imposed on dozens of countries.
However, the sharp overnight rally in US stocks and the dollar lost steam as a trade war between the US and China ratcheted up, with investors also perplexed over the flip-flopping of the Trump administration's tariff plans.
Following a days-long market rout that erased trillions of dollars from global stocks and jolted US Treasury bonds and the dollar, Trump yesterday announced a 90-day pause on many of his new tariffs in a shock reversal.
European stock markets rebounded today after US President Donald Trump abruptly paused steep tariffs on most countries.
London's FTSE index closed 3% higher at 7.913 this evening, while the Paris CAC added 3.8% to finish at 7,126 and the Frankfurt DAX jumped 4.3% to end at 20,307.
While off its earlier highs, Dublin's ISEQ index gained 1.9% to close at 9,574. AIB, Dalata Hotel Group, Glanbia and Bank of Ireland were among the main gainers.
Earlier in Asian trade, Japan's Nikkei share average jumped 9% as investors scooped up beaten-down stocks after Donald Trump declared that immediate 90-day tariff pause for many countries.
But Wall Street stocks suffered another battering today, giving back a sizeable portion of the prior session's gains as investors grappled with lingering uncertainty about President Donald Trump's trade and economic policies.
Major US indices spent the entire day in the red, disappointing traders who had been hoping to extend yesterday's rally following Trump's pivot on tariffs.
The broad-based S&P 500 finished down 3.5% at 5,268. The index had soared 9.5% yesterday.
The Dow Jones dropped 2.5% to close at 39,593, while the tech-rich Nasdaq Composite Index slumped 4.3% to end at 16,387.
"I think the initial move was just massive short cover, and this has given the world a bit of a breathing space, except for China because markets were starting to price in the worst-case scenario," said Khoon Goh, head of Asia research at ANZ.
"But now that the dust has settled, I think markets will seem to sort of figure out where to go from here," he added.
Trump's reversal on the country-specific tariffs is not absolute.
A 10% blanket duty on almost all US imports will remain in effect, the White House said. The announcement also does not appear to affect duties on cars, steel and aluminium that are already in place.
He also heaped pressure on China, saying he would raise the tariff on Chinese imports to 125% from the 104% level that came into effect yesterday.
China yesterday raised additional duties on American products to 84% and imposed restrictions on 18 US companies, mostly in defence-related industries.
Yet investors for now seemed to view the latest escalation of Sino-U.S. trade tensions with a narrow lens, choosing merely to focus on the 90-day window Trump has granted to dozens of countries.
China's CSI300 blue-chip index was up 1%, while Hong Kong's Hang Seng Index advanced 2.4%.
"I guess at least the relief is now global trade won't grind to a complete halt," said Wong Kok Hoong, head of equity sales trading at Maybank.
