Asian shares rallied on Thursday after United States President Donald Trump announced a pause on most of his contentious tariffs, sparking investor optimism across the global financial markets.
Japan’s benchmark Nikkei 225 surged 8.2 per cent to 34,302.05 within minutes of the Tokyo Stock Exchange opening. The S&P/ASX 200 in Australia climbed 4.7 per cent to 7,721.40, while South Korea’s Kospi added 4.9 per cent. Hong Kong’s Hang Seng Index rose 2.8 per cent to 20,821.48, and the Shanghai Composite saw a modest increase of 0.6 per cent to 3,207.35.
The sharp uptick followed one of the most euphoric sessions in Wall Street history, with the S&P 500 soaring 9.5 per cent on Wednesday, its third-best day since 1940. The Dow Jones Industrial Average shot up 2,962 points, or 7.9 per cent, and the tech-heavy Nasdaq leapt 12.2 per cent.
Stephen Innes, managing partner at SPI Asset Management, described the dramatic market response as “from fear to euphoria”.
“It's now a manageable risk, especially as global recession tail bets get unwound, and most of Asia's exporters breathe a massive sigh of relief,” Innes said, referring to tariffs on China that remain in place.
The markets reacted after President Trump posted on social media: “I have authorised a 90 day PAUSE,” in reference to tariffs on more than 75 countries which, he claimed, had not retaliated against the United States’ latest hikes.
Treasury Secretary Scott Bessent later clarified that Trump’s administration would maintain a 10 per cent tariff on nearly all global imports but would suspend the so-called “reciprocal” tariffs on most major trading partners.
However, China was singled out, with Trump confirming that tariffs on Chinese products would rise to 125 per cent — a move that could unsettle financial markets again. The pause, analysts suggest, may not herald an end to the trade war, but offers a temporary reprieve amid heightened global economic uncertainty.
Despite the jubilant sentiment, US stocks remain lower than a week ago, when President Trump had declared “Liberation Day” while announcing the sweeping tariffs.
Investor sentiment was previously dampened by concerns that the escalating trade war might tip the global economy into recession. The S&P 500 had plunged nearly 19 per cent from its record high set two months ago. Wednesday’s rally brought it back from the brink of a “bear market” — defined by a 20 per cent drop — with the index now down 11.2 per cent from its peak.
Market analysts noted that many investors had doubted whether Trump would relent, despite mounting losses in the stock market — a surprise, given his past penchant for touting stock market records under his presidency.
Bond markets also played a key role in the day’s developments. A relatively smooth auction of US Treasury bonds helped calm nerves. Earlier, soaring Treasury yields had stoked fears of stress in the financial system.
President Trump himself remarked that he had observed the bond market “getting a little queasy.” The 10-year Treasury yield, which approached 4.50 per cent in the morning, later settled at 4.34 per cent following the tariff announcement and Treasury auction. That remains significantly higher than Tuesday’s close at 4.26 per cent and the previous week’s 4.01 per cent.
Historically, Treasury yields tend to fall during turbulent market phases as investors seek safer assets. The recent surge in yields suggested that hedge funds and foreign investors may have been selling bonds to cover losses or exit dollar-denominated assets due to tariff risks — pushing prices down and yields up.
In commodity markets, US crude fell 56 cents to $61.79 a barrel, while Brent crude declined 74 cents to $64.74.
On the currency front, the US dollar dipped to 146.83 Japanese yen from 147.38 yen. The euro edged up to $1.0980 from $1.0954.
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