Get insights into stock market gains, shifting bond yields, and investor reactions worldwide
The Asian stock market surged on Thursday, following a powerful relief rally in the United States that marked one of the most dramatic comebacks in market history. The S&P 500 soared 9.5% on Wednesday—its best single-day performance since the global financial crisis—after U.S. President Donald Trump announced a temporary halt on most reciprocal tariffs. The sudden move sent shockwaves through global markets, propelling equities higher and triggering major shifts in bond yields.
Trump’s 90-Day Tariff Pause Sparks Rally
Trump’s surprise decision to pause tariffs for 90 days sparked a wave of optimism among investors. The relief came after weeks of heightened market volatility driven by escalating trade tensions. Although the administration kept a harsh 125% tariff on Chinese imports, traders viewed the overall move as a sign of moderation and flexibility. Trump’s backtracking followed mounting pressure from influential billionaire allies and Wall Street leaders who criticized the tariff campaign for endangering global growth.
The president’s late-night announcement lit a fire under markets that had been reeling from uncertainty. Traders dumped safe-haven assets, repositioned portfolios, and jumped back into riskier equities. Futures for European equities surged more than 9% overnight, indicating broad optimism across global trading floors.
Asia Rallies in Sync with Global Markets
Major Asian indexes followed the rally’s momentum. Japan’s Nikkei 225 climbed over 6%, while Hong Kong’s Hang Seng Index rose 5.2%. In South Korea, the KOSPI gained 4.6%, and Australia’s ASX 200 posted a 4.1% rise. Investors embraced equities amid the improving sentiment and the sense that the worst of the tariff escalation might have passed—at least temporarily.
Analysts noted that trading volume in Asia remained elevated, reflecting the renewed appetite for risk. Sectors that had taken a beating from global trade disruptions—such as industrials, automakers, and tech firms—led the gains. Companies with exposure to the U.S. market and global trade flows benefitted the most.
Treasuries Swing Wildly as Investors Shift from Safety
While equities soared, U.S. Treasury markets experienced extreme volatility. Traders sold short-dated Treasuries in large volumes, driving yields higher. The two-year Treasury yield surged by as much as 30 basis points at one point on Wednesday as investors rotated out of bonds and repositioned into equities.
The 10-year U.S. Treasury yield ended Wednesday four basis points higher after swinging wildly during the day. Early in the Asian session, the yield climbed 22 basis points before moderating. The 30-year bond yield showed a smaller gain, suggesting cautious optimism about long-term economic prospects.
Bond traders adjusted their outlook as Trump’s comments signaled a more market-friendly stance. Investors who had positioned for aggressive Federal Reserve rate cuts reversed some bets. The spike in yields reflected expectations that monetary policy might not ease as quickly as previously anticipated.
Strong Demand for U.S. 10-Year Notes
Just before Trump addressed the media, the U.S. Treasury successfully auctioned $39 billion of 10-year notes. The auction drew solid demand, calming fears that foreign buyers might back away due to policy uncertainty. This strong response contrasted with the lukewarm reception of a three-year note auction earlier in the week.
The positive outcome from Wednesday’s auction set a constructive tone for Thursday’s 30-year bond sale. Traders interpreted the demand as a sign that global investors continue to view U.S. Treasuries as a reliable asset class, even amid geopolitical turbulence and policy flip-flops.
Dollar Retreats as Risk Appetite Returns
The dollar index slipped for the third consecutive day, reflecting the broader shift in investor sentiment. As risk appetite returned, investors reduced their positions in the greenback and turned toward higher-yielding currencies and equities.
The move away from the dollar highlighted a reversal of the previous flight-to-safety narrative that had dominated markets. Emerging market currencies, particularly in Asia, stabilized after weeks of pressure. The Korean won and the Indian rupee posted gains, while the Chinese yuan held steady amid improved trade sentiment.
Trump Urges Investors to “Buy the Dip”
Trump’s policy reversal followed a social media post urging Americans to remain calm and continue investing. He described the current environment as “a great time to buy,” fueling investor enthusiasm. The statement came after days of sharp equity declines and stress in money markets and credit spreads.
His comments aligned with growing pressure from high-profile business leaders who warned that the tariff strategy was causing widespread damage. Several billionaires—including hedge fund managers and corporate executives—publicly criticized the administration’s tactics, highlighting risks to both consumer confidence and business investment.
Analysts Warn Against Overconfidence
Despite the rally, some analysts cautioned against reading too much into the one-day surge. Markets often produce sharp counter-moves during periods of extreme volatility, and long-term uncertainty remains. Corporate managers continue to struggle with strategic planning due to the erratic nature of trade policy.
Tariff threats, even when paused, create lasting damage by complicating supply chains and undermining international relationships. Economists lowered their global growth forecasts and warned that lasting recovery requires consistent policy direction.
Strategists also emphasized that stock valuations remain under pressure from multiple fronts. Earnings expectations face downward revisions, and inflationary pressures could force central banks to remain cautious.
Global Recession Fears Linger
Even with a temporary pause in tariffs, the economic damage already inflicted raises concerns. Several macroeconomic indicators suggest that the world economy faces elevated recession risks. Trade volumes have dropped in recent months, and business confidence remains weak.
In the U.S., manufacturing activity shows signs of contraction, and consumer sentiment has softened. Europe and Asia also exhibit sluggish demand trends. Analysts argue that the return of investor confidence requires more than a short-term policy shift.
Market Breathes, But Uncertainty Prevails
Thursday’s relief rally provided much-needed breathing space for investors, but underlying tensions in the global economy remain. Trump’s tariff pause sparked short-term optimism and triggered a powerful rebound across equity markets, but deep concerns still hover over the sustainability of growth.
Traders welcomed the reversal and capitalized on the rebound, yet the path forward depends on clear and consistent policy signals. For now, the world’s financial markets remain alert, reacting swiftly to each policy announcement, tweet, or shift in tone. Amid these conditions, vigilance, diversification, and strategic flexibility will define the market’s next move.
