Asian stocks experienced their most significant rally in over two years on Thursday, following a strong global market rebound after U.S. President Donald Trump announced a temporary halt to most of his sweeping reciprocal tariffs. The move provided much-needed relief to investors, as Treasury bonds also saw a surge after a volatile trading session.
Shares across the region gained momentum after the S&P 500 posted its strongest performance since the global financial crisis. While European equity futures soared by more than 7%, U.S. stock futures showed a slight decline, indicating that market uncertainty persists. The yield on 10-year U.S. Treasuries dropped, following a sharp 34-basis-point rise over the previous days, which had raised concerns about the stability of the world’s largest debt market. Meanwhile, metal prices ended their longest losing streak in 25 years.
Chinese equities advanced, driven by expectations of further stimulus measures following Trump’s decision to raise tariffs on the country to 125%. China’s top leadership is expected to meet soon to discuss additional economic policies aimed at countering the pressure.
Trump’s unexpected pivot came after days of market turmoil, as the selloff in the Treasuries market intensified. The sharp financial stress also led to a recession warning from JPMorgan Chase CEO Jamie Dimon. The temporary reprieve highlights the significant influence market forces can have on U.S. trade policy, particularly after Trump’s introduction of 100-year high tariffs aimed at reshaping the global trading system.
“We think Trump blinked, and the probability of a ‘contained damage’ scenario is rising,” said Homin Lee, senior macro strategist at Lombard Odier in Singapore. “We expect Europe and Asia to follow the U.S. relief rally. The punitive tariff on China is mostly symbolic at this point.”
The latest announcement from Trump, which halts reciprocal tariffs for 90 days, came after global equity markets suffered a $10 trillion loss and U.S. Treasuries saw a sharp decline. However, the president still raised duties on Chinese goods to 125%, while China retaliated by planning to increase tariffs on U.S. products to 84%. Countries impacted by the new, higher reciprocal tariffs will revert to the earlier 10% rate, excluding China, according to White House officials.
This shift in policy went into effect at 12:01 AM Washington time on April 10. The 125% tariff rate on China includes goods from Hong Kong and Macau.
“Investors across Asia and beyond are breathing a sigh of relief,” said Frederic Neumann, chief Asia economist at HSBC. “The delay of reciprocal tariffs by the U.S. gives more time for negotiations, which is especially crucial for export-driven Asian economies that would have been severely impacted by steep U.S. tariffs.”
While Chinese stocks rose in anticipation of stimulus, the onshore yuan weakened, dropping to its lowest point since 2007. Investors are betting on monetary easing measures by the People’s Bank of China to support the economy, further pressuring the currency.
In the bond markets, a $39 billion sale of 10-year U.S. notes saw strong demand, despite concerns that Trump’s policies might discourage foreign buyers. This positive response came after a lackluster sale of three-year notes on Tuesday, improving market sentiment ahead of Thursday’s 30-year bond auction.
Trump praised the U.S. Treasuries market, calling it a “thing of beauty,” despite the massive swings caused by his reversal on trade policy. The turbulence in U.S. bond markets, particularly in short-dated Treasuries—traditionally a safe haven for investors during times of turmoil—was exacerbated as investors shifted toward equities.
Global bond markets, from Australia to Japan, experienced significant fluctuations on Thursday following the chaotic events in the U.S. Treasuries market, forcing traders to brace for continued volatility in the wake of trade war uncertainties.
“This period of instability will continue for the next couple of weeks,” said Tsutomu Soma, a bond trader at Monex Inc. in Tokyo. “No one knows what shape these tariffs are ultimately going to take, and everyone’s watching U.S. yields—so brace for more chaos ahead.”
In commodity markets, oil prices resumed their downward trend as investors grappled with the shifting policies, while gold prices saw a modest increase.
Key Market Movements:
Stocks:
- S&P 500 futures fell 0.8% as of 1:32 p.m. Tokyo time.
- Japan’s Topix rose 7.5%.
- Australia’s S&P/ASX 200 climbed 4.7%.
- Hong Kong’s Hang Seng gained 1.8%.
- Shanghai Composite rose 0.9%.
- Euro Stoxx 50 futures surged 8.1%.
Currencies:
- Bloomberg Dollar Spot Index declined 0.4%.
- Euro rose 0.3% to $1.0984.
- Japanese yen rose 0.8% to 146.54 per dollar.
- Offshore yuan remained unchanged at 7.3519 per dollar.
Cryptocurrencies:
- Bitcoin dropped 1.8% to $81,664.45.
- Ether decreased 3.8% to $1,609.81.
Bonds:
- Yield on 10-year U.S. Treasuries fell by six basis points to 4.27%.
- Australia’s 10-year yield dropped 10 basis points to 4.29%.
Commodities:
- West Texas Intermediate crude fell 1.4% to $61.50 per barrel.
- Spot gold rose 1.4% to $3,125.16 per ounce.
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