Trump’s 90-Day Tariff Freeze Lifts Global Markets

In response to the tariff suspension, major stock indices across Europe and Asia posted significant gains. The EUROSTOXX 50 and Germany's DAX futures each climbed nearly 8%, while Japan's Nikkei advanced more than 8%. These rallies reflected investor relief and optimism that the temporary truce might ease trade tensions and bolster economic stability.

Despite the global uptrend, U.S. markets displayed mixed reactions. The S&P 500 recorded a 9.5% surge, marking its most substantial daily percentage gain since October 2008. However, this optimism was tempered as U.S. stock futures dipped and the dollar weakened against safe-haven currencies like the Japanese yen and Swiss franc. Investors remained cautious amid ongoing uncertainties regarding the Trump administration's economic policies and escalating U.S.-China trade tensions.

While the tariff pause applied to several countries, China was notably excluded. President Trump increased tariffs on Chinese imports from 104% to 125%, intensifying the trade war between the two economic giants. In retaliation, China raised duties on U.S. goods to 84% and imposed new restrictions on 18 American firms. These actions signaled a deepening rift and heightened concerns about prolonged economic conflict.

The escalation in U.S.-China trade tensions prompted investors to seek refuge in safe-haven assets. The Japanese yen and Swiss franc strengthened, while risk-sensitive currencies like the Australian dollar and Chinese yuan weakened. The yuan, in particular, declined to its lowest level since 2007, reflecting market apprehension about China's economic outlook.

In the commodities sector, gold prices surged over 1%, driven by increased demand for safe-haven investments amid the intensifying trade war. Spot gold climbed 1.5% to $3,129.33 per ounce, marking its strongest performance since October 2023. Conversely, oil prices retreated, with Brent crude falling 1.18% to $64.71 a barrel, as concerns about reduced demand overshadowed the temporary tariff pause.

The bond markets, which had experienced a sharp selloff due to tariff-induced volatility, showed signs of stabilization. U.S. Treasury yields, which had surged earlier in the week, began to level off. However, the Federal Reserve indicated reluctance to lower interest rates in the near term, citing ongoing inflation concerns.

Despite the temporary relief provided by the tariff suspension, investor sentiment remained cautious. The exclusion of China from the tariff pause and the subsequent escalation in trade tensions underscored the fragility of the current economic environment. Analysts warned that the ongoing trade conflict could have long-term implications, potentially leading to slower global economic growth and increased market volatility.

President Trump's decision to suspend tariffs for 90 days on several countries sparked a relief rally in global stock markets. However, the simultaneous escalation of the U.S.-China trade war introduced new uncertainties, prompting investors to remain vigilant. The coming weeks will be critical in determining whether these developments lead to substantive negotiations or further economic discord.