Trump's tariff pause sparks surge in European and Asian markets

Source: Reuters.

However, the strong overnight gains in US equities and the dollar began to fade as tensions in the US–China trade conflict escalated. Investors were left uncertain and unsettled by the Trump administration’s inconsistent stance on tariff policy.

This sparked sharp gains in European and Asian markets. EUROSTOXX 50, DAX, and Nikkei surged over 8%. Wall Street cooled after a major rally. Analysts criticised the US administration’s erratic policy shifts, calling them alarming amid deepening concerns over economic credibility and global stability.

Nasdaq and S&P 500 futures fell after record gains, while the dollar slipped against safe havens. Analysts say markets are stabilising post-short covering, though US blanket tariffs - the 10% base tariff - and existing duties still remain in place.

He further intensified pressure on China by announcing plans to raise tariffs with immediate effect on Chinese imports to 125%, up from the 104% rate implemented on Wednesday, 9 April 2025. In response, China increased tariffs on US goods to 84% and imposed restrictions on 18 American companies, primarily in the defence sector.

Despite rising US-China tensions, investors focused on Trump’s 90-day tariff pause, boosting China’s CSI300 and Hong Kong’s Hang Seng. Analysts see global-trade relief and supply-chain flexibility, though the yuan hit a 2007 low.

Bond market turmoil showed signs of easing as the 10-year US Treasury yield fell after surging earlier.

Concerns persist due to inflation, weak demand, and illiquidity.

Fed officials remain cautious on rate cuts, while oil prices dropped amid trade-war fears.