Wall Street roared back into life after US President Donald Trump surprised investors with a 90-day pause on his reciprocal tariffs to most countries, targeting his trade war to China where punitive import levies remain.
The Magnificent 7 megastocks surged between 7.4% for Google-parent Alphabet to a 19% gain for Tesla and 16% for Nvidia, as stocks on Wall Street charged higher on the news, which first emerged as a post on the Truth Social platform.
The S&P 500 climbed 6.8% in late trading, clawing back some of the losses since the Liberation Day reveal, while the Nasdaq Composite jumped 8.8%.
Trump hit pause on the tariff regime, imposing a blanket 10% levy while the US embarks on country-by-country negotiations led by Treasury secretary Scott Bessent. More than 75 countries have sought to start trade talks with the US since the tariffs were unveiled.
China was the stark exception, facing an even steeper hike as the tit-for-tat retaliations between the world’s two biggest economies enter a full-blown trade war. That didn’t weigh on Chinese companies with listings in New York, as Alibaba Group Holdings rose 5.9% and JD.com advanced 7.6%.
“The announcement of the 90-day pause contributed to huge rebound in risk sensitive assets,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “The improved sentiment contributed to large gains in growth sensitives currencies like the Australian dollar and NZ dollar and while the yen and Swiss franc fell against the US dollar given their defensive properties.”
The kiwi soared to 56.45 US cents at 7am from 55.46 cents yesterday.
Unleashing the bank
The major US banks joined the relief rally with JP Morgan Chase advancing 8% and Goldman Sachs climbing 12%, getting the additional support from Bessent’s foreshadowing of a broad review of capital regulations for lenders in the world’s biggest economy.
European markets closed before the announcement, with the UK’s FSTE 100 index falling 2.9% and Germany’s DAX 30 down 3%.
The selloff in government bonds slowed after the announcement, with the yield on US 10-year Treasuries falling 3 basis points to 4.4%, having spiked to a seven-week high during yesterday’s Asian trading session.
“The US yield curve steepening and increasing volatility across asset markets raised questions if there was something structural breaking within the financial system,” Ritson said. “Treasuries have remained volatile overnight, but 10-year yields have fallen back from the Asian peak and front-end rates have traded sharply higher flattening the curve.”
The stock market rally is poised to extend into Australasia, with Australian futures pointing to a 1.2% gain for the S&P/ASX 200 index.
New Zealand’s Reserve Bank cut the official cash rate a quarter-point to 3.5% yesterday and left the door open to further reductions amid the heightened uncertainty over the global trade situation.
No local data is scheduled for today.
Reporting by Paul McBeth. Image from Cemrecan Yurtman on Unsplash.