Global markets rally after Trump pauses tariffs for many nations | Invesloan.com

Good morning and welcome back on another hugely volatile day for global stock markets. We’ll bring you the latest reaction to Donald Trump’s decision to pause “reciprocal” tariffs for 90 days. And here’s what else we’re covering.

• The impact of Doge’s job cuts on the US traffic safety regulator

• Apple turns to India after Trump’s tariff blitz

• A rule change that could blow open US law

• And a speedboat tour of the Thames

Donald Trump’s shock announcement to declare a 90-day pause on his “reciprocal”, “liberation day” levies triggered one of the most powerful rallies Wall Street has ever seen — a sentiment that has spread to global equities today. Here’s the latest.

A historic day: The S&P 500 jumped 9.5 per cent, adding $4.3tn to the index’s value, according to Financial Times calculations based on FactSet data. The Nasdaq high-tech index had its best day since 2001, during the dotcom bubble. The powerful US rally has carried over into Asia and Europe today. The Stoxx 600, a widely followed European benchmark, rose 7 per cent this morning, its biggest intraday gain since the beginning of the pandemic in 2020. Across Asia, too, stock markets had a very positive day, with the Nikkei 225 up more than 9 per cent — its second-biggest point gain in history.

US government bonds, which had plunged in recent days sparking fears of financial meltdown, also rallied yesterday and into today. The yield on the 10-year Treasury is currently down 8 basis points at 4.26 per cent. Oil prices, however, fell this morning after Trump increased tariffs on China, the world’s second-largest economy. Brent crude is currently down 39 cents or 0.6 per cent at $65.09 a barrel. US futures contracts are also falling, suggesting a lower open for the S&P 500 and Nasdaq when trading begins on Wall Street.

Why did Trump back down? Many market commentators are suggesting today that the moves in the US government bond market spooked the White House and forced the president to reverse some of his trade tariffs. The 10-year Treasury is the bedrock of the global financial system and is widely held across the world by pension funds, hedge funds as well as government and corporate treasury departments. It is also used as a benchmark for pricing loans and other financial products worth trillions of dollars. The sudden moves in the Treasury market over the past few days have made market participants very jittery. Trump appeared to acknowledge this in comments made after his tariff pause. “People were jumping a little bit out of line,” he told reporters. “They were getting yippy, you know, they were getting . . . a little bit afraid.”

What happens next? July 8 is a date to put in your diary. That’s when the 90-day pause on the so-called reciprocal tariffs ends. The next three months will see ferocious diplomacy between the US and its trading partners. Japan, South Korea and Vietnam are the first of many countries seeking to secure a hearing from the US administration. But the stand off between the world’s two largest economies deepens. The US president increased tariffs on China to 125 per cent yesterday from 104 per cent after Beijing retaliated to Trump’s tariffs by bringing in reciprocal levies on US imports of 84 per cent, taking total tariffs on US exports to China over 100 per cent. Beijing has not yet responded to Trump’s extra 21 per cent tariff but reiterated its vow to “fight to the end”. Follow the latest market reaction to Trump’s trade war on our live blog.

• Why did Trump cave? The reversal is a sign that Trump is still susceptible to backlash from investors, lawmakers and donors.

• What was behind the Treasury market sell-off? The double blow of falling bond and equity prices could partly be hedge funds unwinding so-called ‘basis trades’, writes Gillian Tett.

• Main Street: Despite what the president and loyalists say, the violent market gyrations have reached further than New York billionaires.

• Trump tracker: Follow the latest data on imports, exports and trade balances with our interactive tracker.

For more analysis on the tariffs, sign up for our Trade Secrets newsletter if you’re a premium subscriber, or upgrade your subscription. Here’s what else we’re keeping tabs on today:

• Economic data: The US releases its March consumer price index and the latest annual inflation figure. Brazil publishes service sector growth data.

• Monetary policy: Mexico’s central bank releases minutes from its March monetary policy meeting and Peru’s central bank is expected to keep interest rates on hold at 4.75 per cent. In the US Fed governors will be speaking at events across the country.

• Congress: The Senate Banking Committee is expected to hold a hearing on the nomination of Michelle Bowman for the role of Federal Reserve vice-chair for supervision.

• US-Russia relations: Delegations from Russia and America meet in Istanbul, Turkey for a second time “solely” to discuss stabilising bilateral embassy operations, according to the US State Department.

Join Unhedged’s Robert Armstrong and other FT experts on April 23 for a subscriber-only webinar, as they break down how Trump’s policies are reshaping markets. Register for free.

Five more top stories

1. Exclusive: Job cuts at the US traffic safety regulator by Elon Musk’s team disproportionately hit staff assessing self-driving risks, hampering oversight of technology key to Tesla’s future. The National Highway Traffic Safety Administration has long been a thorn in the side of Musk’s carmaker, with eight active investigations into the company.

• Cost-cutting drive: The Trump administration is threatening to end billions of dollars’ worth of consulting contracts after finding firms’ proposals for savings to be “insulting”.

• Starlink: Elon Musk’s satellite business is in a fight with Canada’s top telecoms group over accessing millions of dollars in subsidies.

2. Apple is flying more iPhones from India to the US following Trump’s tariff blitz, with Indian officials saying the tech giant is considering further investment in the country. The move highlights Apple’s dilemma after counting on advanced manufacturing in China for decades. Read more about how the company has been quietly growing its business in India.

3. Falling oil prices triggered by Trump’s trade war have pushed parts of America’s shale sector to the brink of failure, executives have warned. US oil prices have fallen 12 per cent since Trump’s “liberation day” tariff announcement last week, leaving them below the level many producers in Texas say they need to break even.

4. Germany’s Friedrich Merz yesterday reached a deal to form a coalition government with his junior partners, the Social Democrats (SPD), bringing the conservative leader closer to the chancellery. Here’s more on what one of the opponents of Merz, a former BlackRock executive, nicknamed the “BlackRot” coalition.

5. Creditors of fallen edtech company Byju’s have sued its co-founders and strategy chief for allegedly “masterminding the theft of more than half a billion dollars”. Byju was once India’s most valuable start-up and its backers included asset manager BlackRock, investment group Prosus and Meta chief Mark Zuckerberg. Read more on the US legal action.

Explainer

Donald Trump’s decision to suspend his so-called reciprocal tariff scheme was welcomed by Wall Street but the move to double down on his trade war with China is alarming for the global economy. After a dizzying few days of trade policy announcements from the White House, FT reporters take you through where things currently stand.

We’re also reading . . . 

• Howard Marks: Global trade has had an enormous beneficial effect on the entire world, says the co-founder and co-chair of Oaktree Capital Management, because of comparative advantage.

• Lloyd’s of London: The inimitable insurance market is Britain’s strangest success, writes John Gapper, but it must remain attractive in the face of global competition.

• Saturday Night Live: A British version of the popular US comedy show could be in the works.

• Russia’s asset grab: Vladimir Putin has been on a nationalisation spree even as he makes overtures to western companies.

Map of the day

The wild west’s libertarian streak extends to the traditional business of law. Almost half a century after two young Phoenix lawyers overturned a law banning legal advertising, Arizona is permitting non-lawyers to own legal practices, potentially unleashing a wave of private equity money.

Take a break from the news

A new thrill ride on the Thames launching today shows visitors the sights of London at 30 knots — and underlines the river’s transformation from industrial artery to leisure opportunity.