Asian and European stocks surged and US futures fell Thursday after President Donald Trump announced he was postponing most of his planned tariffs for 90 days.
The moves came after Trump paused most reciprocal tariffs while keeping the baseline 10% rate in place.
However, he raised import taxes on Chinese goods to 125% in an escalating trade war between the two mega economies.
Chinese stock markets were still higher on Thursday, but state-backed buying has been supporting China's markets over the last few days. Investors are also expecting stimulus from Beijing.
"The government will likely wait for the trade data and react with fiscal stimulus," wrote Zhiwei Zhang, chief economist of Pinpoint Asset Management in Hong Kong, on Thursday.
Here's where major indexes in Asia stood at close:
European stocks jumped in morning trading as index heavyweights including Barclays, Adidas, and LVMH rallied strongly:
Germany's DAX: +5.3%
Britain's FTSE 100: +4%
France's CAC 40: +5%
Euro Stoxx 50: +5.4%
US stock futures were down:
Oil futures were about 3% lower, reflecting persistent concerns about a global economic downturn:
Analysts warned the 90-day pause on tariffs is just that — a pause while negotiations are underway. The baseline 10% tariff rate is also still the highest in decades.
"While there has been understandable relief as evidence of a Trump put reemerged following the extreme market conditions that we highlighted yesterday morning, the genie is still out of the bottle on policy unpredictability," wrote Deutsche Bank analysts in a Thursday note.
"Perhaps most crucially, we are currently still on course for a disorderly economic decoupling between the world's two largest economies, with no immediate signs of either US or China backing down."
Trump's decision followed a rout in US Treasurys amid what some call the "Sell America" trade.
A sell-off in Treasurys means that yields rise, which would typically increase interest rates. This is at odds with Trump's goal of lowering borrowing costs for Americans.
A US Treasury debt auction of $39 billion in benchmark 10-year notes on Wednesday drew better-than-expected demand, alleviating some concerns after a weak auction of three-year notes a day earlier.
US Treasurys rose on Thursday as their yields fell.
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