HONG KONG (AFP) – Stocks rocketed yesterday as a relief rally spread through markets after Donald Trump paused crippling tariffs on United States (US) partners, with Chinese investors even brushing off his decision to ramp up duties on Beijing to 125 per cent.
The across-the-board gains tracked a blistering performance on Wall Street as the US president said he would delay for 90 days measures announced last week that set off a firestorm on trading floors and sparked global recession fears.
Trump said he would keep in place a basic levy of 10 per cent on dozens of countries but upped the ante in his brutal trade war with superpower rival China by hitting it even harder after it retaliated.
The president denied he had made a U-turn, telling reporters that “you have to be flexible”.
And his top trade advisor Peter Navarro said: “This will go down in American history as the greatest trade negotiating day we have ever had.
“We’re in a beautiful position for the next 90 days, we’ve got over 75 countries that are going to come in and negotiate with us and what they’re going to have to do, without fail, is they’re going to have to lower their non-tariff barriers.”
Trump’s shock announcement on his Truth Social network sparked a buying frenzy as Asian and European investors chased beaten-down stocks.
“Asia markets are flipping the switch – from fear to euphoria – as Trump throws a 90-day lifeline, pausing the reciprocal tariff barrage,” said Stephen Innes at SPI Asset Management.
“We just witnessed one of the all-time bouncebacks – and now, we look for Asia investors, much like their North American counterparts, to step in and buy the ‘yips’.”
Tokyo’s Nikkei surged more than nine per cent.
Hong Kong rallied more than two percent – a third day of gains after collapsing more than 13 per cent on Monday in its worst day since 1997 during the Asian financial crisis.
Shanghai gained more than one per cent.
The two markets have been given extra support by optimism that China will unveil fresh stimulus to support its economy.
Seoul, Singapore, Jakarta, Sydney, Saigon and Bangkok climbed between four and 6.6 per cent. Manila and Wellington were also well in the positive territory.
In early trade, Paris and Frankfurt cruised more than six per cent higher and London rallied more than four per cent.
Tech firms were the standout performers, with Sony, Sharp, Panasonic and SoftBank chalking up double-digit gains, while airlines, car makers and casinos also enjoyed strong buying.
Gold surged almost three percent around USD3,120 – around USD50 short of its record touched last month – thanks to the weaker dollar and as the uncertainty saw investors rush into the safe haven.
Chihiro Ota, at SMBC Nikko Securities, said: “What happens now? If the US takes hardline stance (in negotiations), then the market would be disappointed. If it turns out that they can engage in talks, then it may create a room for (an upswing).”
US Treasury yields also edged down, after a successful auction of USD38 billion in notes, said Briefing.com.
That eased pressure on the bond market, which had fanned worries investors were losing confidence in the US.
However, observers warn the China-US standoff could mark a step towards a disengagement between the world’s top two economies.
“The escalation of the trade war between the US and China suggests that a full trade decoupling is increasingly likely,” said emerging markets economist at J. Safra Sarasin bank Mali Chivakul.
“Even if we may see a de-escalation later, a decoupling could still be the result.” Trump’s trade war is also causing a headache for the Federal Reserve as it weighs cutting interest rates to protect the economy or holding them to ward off the inflation many said tariffs will fuel.
Minutes from its March meeting, released on Wednesday, showed members felt they “may face difficult trade-offs if inflation proved to be more persistent while the outlook for growth and employment weakened”.
Oil prices dropped after bouncing more than four per cent on Wednesday, though they remain under pressure amid concerns about the global economy and its impact on demand.
