Global markets rebound before Trump’s reciprocal tariffs kick in
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The news: Global stock markets rebounded Tuesday after three days of heavy selling, lifted by investor optimism that Washington might be willing to negotiate on some of its aggressive tariffs.
The numbers: The Dow rose as much as 3.84% to 39,426.60, the S&P 500 at one point reached 5,267.47 to gain 4.05%, and the Nasdaq climbed as much as 4.57% to 16,316.50.
Tech and energy shares led gains on Wall Street, with Nvidia up 5.6%, Microsoft adding 3%, and the information technology sub-index rising 3.6%. Oil prices also rebounded, lifting energy stocks.
By early afternoon, indexes had pared gains, with the Nasdaq 100 up 0.79%, the S&P500 UP 1.35% and WTI crude flipping to negative.
The rebound on Wall Street followed overseas rallies, led by Japan’s Nikkei, which closed 6% higher. The pan-European STOXX 600 rose 3.69%. Canada’s TSX rose 2%, most Latin American stocks gained, and MSCI’s global stock index climbed 3.4%.
Bond risk measures in US corporate debt eased, and gold rose above USD3,000 an ounce.
Treasury yields on government bonds rose for a second day and the dollar remained weak. The 10-year yield climbed to 4.243%, up from 3.86% on Friday, while the dollar index fell to 103.34.
The context: Reciprocal tariffs of 11% to 50% on imports from 83 countries take effect at midnight Washington time (2pm AEST), according to a Customs and Border Patrol bulletin cited by Reuters.
That includes import tariffs of 34% on China, 24% on Japan,and 20% on the European Union. China will face a total levy of up to 104% if President Trump follows through on his threat to impose an additional 50% tariff on top of existing duties.
US Trade Representative Jamieson Greer, speaking before the Senate Finance Committee, said the administration does not plan exemptions or exclusions, and confirmed that negotiations are underway with multiple countries.
He said there is “no particular timeline” for deals and talks will proceed “country by country.”
Meanwhile, China’s offshore yuan weakened to a record low. Leaders of the world’s second-largest economy vowed to “fight to the end” after President Trump threatened an additional 50% tariff if Beijing did not withdraw its retaliatory levies.
Beijing accused the US of “blackmail” and said it would never accept negotiations under such threats.
What they said: Senators criticised the administration’s decision to impose a 10% tariff on Australia despite a free trade agreement and a US trade surplus with the country.
Senator Mark Warner, a Democrat from Virginia, said it was “insulting” and undermined US national security. Greer defended the measure, saying “we should be running up the score in Australia” and cited Australian bans on US beef and pork. Warner responded by saying the tariffs made the US “not a good partner going forward”.
The sources: Bloomberg, The Wall Street Journal, Reuters
