(Bloomberg) — Asian stocks posted their biggest jump in more than two years as global financial markets rebounded after US President Donald Trump paused most of his sweeping reciprocal tariffs. Treasuries rallied after a tumultuous session.
Shares across the region gained Thursday after the S&P 500 had its best day since the global financial crisis. While equity-index futures for Europe surged more than 7%, contracts for US stocks declined, indicating markets are still in a flux. Yields on 10-year Treasuries fell after a 34 basis point surge in the past three days spurred worries about the stability of the world’s biggest debt market. Metals halted the longest run of losses in 25 years.
Chinese stocks advanced on expectations for more stimulus after Trump increased levies on the country to 125%. The country’s top leaders are poised to meet Thursday to discuss additional economic measures.
Trump’s pivot came as the scale of the selloff in Treasuries market and days of mounting financial stress rattled investors and spurred a recession warning from Jamie Dimon. The reprieve underscores the pressure markets can bring to bear as Trump sought to remake the world trading order with 100-year high levies.
“We think Trump blinked, and the probability of a ‘contained damage’ scenario is rising,” said Homin Lee, a senior macro strategist at Lombard Odier Ltd. in Singapore. “We expect Europe and Asia to echo the US relief rally. The punitive tariff rate on China is mostly symbolic at this point.”
After $10 trillion was wiped off global equity markets and US Treasuries plunged, Trump announced a 90-day pause on the so-called reciprocal tariffs that hit dozens of trading partners after midnight. However, he raised duties on China to 125%. That came after the Asian nation retaliated and said it will raise levies on US goods to 84%.
Countries that were hit with the higher, reciprocal duties that went into effect Wednesday will now be taxed at the earlier 10% baseline rate applied to other nations, with the exception of China, according to a White House official.
The new tariff rates took effect at 12:01 am Washington time on April 10, according to a customs guidance released late Wednesday, and the 125% levy on China specifies that it’s inclusive of Hong Kong and Macau.
“Investors across Asia and beyond are breathing a sigh of relief,” said Frederic Neumann, chief Asia economist at HSBC Holdings Plc. “The postponement of reciprocal tariffs by the US allows more time for negotiations. For export-centered Asian economies this is especially important, given the growth impact steep US tariffs would have had.”
