European markets experienced a sharp rally on Thursday, with the pan-European Stoxx 600 rising 4.9% by mid-morning. The surge followed an unexpected move by U.S. President Donald Trump to temporarily pause higher tariffs on imports from most trade partners. This pause offered traders a reprieve after days of sharp market volatility, lifting sectors such as banking, technology, and industrials, which saw gains of up to 6.9%. The rally came on the heels of a 3.5% drop in the Stoxx 600 the previous day, marking its lowest close since January 2024.
Trump’s tariff pause temporarily lowered tariffs to 10% for 90 days, signaling a shift away from his previous stance that no tariffs would be lifted. This announcement fueled a dramatic recovery in U.S. stocks, with the S&P 500 rising 9%, its third-largest one-day gain since World War II. The Dow Jones also surged by nearly 8%, and the Nasdaq climbed over 12%, marking its largest jump since 2001. Deutsche Bank’s George Saravelos suggested that the move reflects the U.S. administration’s increased responsiveness to market pressures.
While the pause on tariffs provided relief for most countries, China did not benefit from the reduction. The U.S. imposed additional tariffs of 125% on Chinese imports in retaliation for China’s own tariff increases on U.S. goods. This escalation reflects the ongoing tensions in U.S.-China trade relations, which have been a key factor in global market uncertainty. Meanwhile, the European Union moved forward with countermeasures in response to the U.S.’s steel and aluminum tariffs.
The effects of the tariff pause extended beyond Europe and the U.S., with Asian markets also experiencing notable gains. Japan’s Nikkei 225 index surged by over 8%, leading the way in Asia-Pacific. Global trade bellwether Maersk saw a 12% increase in its shares, reflecting the broader optimism. Industry leaders like Ray Dalio of Bridgewater Associates expressed hope that the tariff rollback could signal a potential shift toward more negotiated outcomes in international trade disputes, benefiting global economic stability.
Source: cnbc