Despite the sigh of relief from the rising of the markets, investors are not necessarily saved
US shares went up on Wednesday after President Donald Trump announced on social networks a 90-day break in the “reciprocal” tariffs that came into force at midnight except China.
Wall Street had been on the edge, looking for any sign that Trump could change his approach to punitive tariffs. Thus, when Trump announced that he was a break from most reciprocal tariffs, investors were ready to invest.
American actions went up immediately. Dow shot 2,963 points, or 7.87%. The S&P 500 rose 9.51%. High -tech NASDAQ rose 12.16%.
In a huge turnaround, S&P 500 has recorded its best day since October 2008. Nasdaq has recorded its best day since January 2001 and the second best day in its history. DOW has recorded its best day in five years.
The S&P 500 rose 12.86% over its lowest point, reached two days ago, but continues more than 3.7% below the April 2 closure, just before Trump put its reciprocal tariffs in force. Nasdaq is still 2.7% below its closing of April 2.
“The rising movement of the market is violent and shows how much the market was looking for clarity on this issue,” says Chris Brigati, SWBC’s investment director, an investment company in San Antonio, Texas.
The positive change was widespread. Almost all S&P 500 companies rose, according to FactSet data.
Following Trump’s announcement, investors climbed the stock price and the markets fired. However, uncertainty remains, as Trump continues to intensify trade war with China, increasing its customs rates from 104% to 125%. In addition, 10% universal rights remain on all US imports, along with specific cars sectoral tariffs.
The S&P 500 was on the verge of entering the low market territory, approaching an amazingly rapid 20% fall compared to the historical maximum reached seven weeks ago, on February 19.
Wall Street sighted relief from the markets, but investors are not necessarily saved.
“Trump illustrated everyone in the market today how incredibly difficult it is to negotiate around his tariff regime, because he and only he knows when he ends,” warns Jamie Cox, managing partner of Harris Financial Group.
Shortly after the opening bell, Trump published on his social networking platform Truth Social: “Be cool!” and “This is a great time to buy !!!”
A huge change in markets
The US shares had a mixed daytime start, after China announced a significant retaliation and the European Union announced contramers against the huge “reciprocal” tariffs of President Donald Trump, who had been effective earlier this day.
China’s new tariffs on US products rise to 84%, which corresponds to the additional rights that Trump administration has just imposed on the world’s second largest economy. China, an extreme case, now faces an American tariff of at least 104%, aggravating new rates with those already in force.
Fear has taken over investors around the world, as customs rights threaten to dive world and American economies in a recession this year. Companies and consumers will eventually pay these huge tariff invoices and uncertainty has led to a softening of consumer hiring and spending.
Japan’s Nikkei index closed at a 4%drop, while Hang Seng from Hong Kong ended up marginally on the rise. On Monday, Hang SENG fell 13% – the biggest daily drop in the index since the 1997 Asian financial crisis.
South Korea’s reference rate, Kospi, went down in the market on Wednesday, a 20% drop from recent peak, after the country announced $ 1.3 billion in emergency support measures for its auto industry while sought to mitigate the Trump administration tariff coup. The index closed at 1.7%, falling about 20% compared to a peak reached in July 2024.
The markets in Taiwan also fell sharply. But Shanghai’s stock market closed more than 1% higher, an outlier in a sea of red this Wednesday.
In Europe, the region’s Stoxx 600 reference index fell 3.5%. France’s CAC index fell 3.34% and Germany DAX descended 3%. The FTSE 100 index of London registered a descent of 2.92%.
Oil recovers and obligations are acting strangely
Meanwhile, US oil reversed the course after falling early in the day. American oil has gained 4.65% to $ 62.35 per barrel. Sine that at the beginning of the day, had fallen to $ 57 per barrel. The overall oil reference reversed the trend after falling briefly below $ 60 the barrel and eventually rose 4.23%to $ 65.48 the barrel. Both had reached their lowest level since 2021 at the beginning of the day. Petroleum prices fell as investors feared that potential global recession could undermine the demand for travel, transportation and maritime transport – all which require fuel.
Investors have invested money in some traditional safe ports, such as gold. Gold prices rose 3.8%.
But curiously, US Treasury income has risen in recent days with investors selling obligations. The 10 -year reference yield, which fell below 4% earlier this week, now around 4.3%. Obligations were volatile on Wednesday, with the income descended slightly after they went up, but above the last sessions. Income and obligations prices are negotiated in opposite directions.
Usually, in times of crisis, investors inject money into longer -term obligations, hoping that short -term market problems will be resolved in the long run. But the obligationary market, like the scholarship market, has been shaken by extreme volatility in recent days, and some investors are going to exit.
On Wednesday, Deutsche Bank analysts stated that the massive exodus of treasure obligations could be a sign of weakening the demand for assets guaranteed by the United States – traditionally considered as the gold standard in terms of security because they have the support of the United States government.
But in a trade war, investors may begin to be afraid that the United States will lose their deprived position in the world – an opinion shared by JPMorgan CEO Jamie Dimon in his letter to shareholders earlier this week. And foreign governments that negotiate with Trump over trade can threaten to sell their huge treasure reserves, damaging US ability to borrow money to pay their significant budget deficit.
“A political goal of reducing bilateral commercial imbalances is functionally equivalent to also reducing the demand for US assets,” Deutsche Bank analysts say in a note to investors.
The US dollar index, which measures the strength of the dollar against six foreign currencies, reduced gains after falling on Wednesday. The dollar has been weakened widespreadly this year – a potential warning signal about decreasing investor confidence in the United States.
High volatility
The Cboe volatility index, also known as Wall Street’s “VIX” and “fear meter”, briefly exceeded 50 – a level that the index only closed above this week: during the early stages of Covid pandemic in March and April 2020, and during the 2008-2009 financial crisis, which caused the so -called great recession.
VIX sank 30% after Trump’s announcement of a break in most reciprocal tariffs.
VIX is perhaps the best known measure of market feeling. Measures expected price fluctuations or the volatility of S&P 500 index options within the next 30 days. The VIX frequently rises on the days when the widest market sinks – and rises when shares go up. But over time, VIX tends to be lower in the high and higher markets when the bears are in control.
Lately, the feeling of low is widespread throughout the market. CNN’s fear and greed rate has solidly pointed to “extreme fear” in the last days – approaching the lower point of its scale.
Volatility works in both directions, and Monday and Tuesday are good examples. The market rose, sank and jumped in all directions during the day, as the news – and even some false news on Monday – about Trump’s potential plans for the imposition of tariffs spread through Wall Street.
“The US and China are now involved in a trade war, without any of them being able to retreat right now,” says Susannah Streeter, Hargreaves Lansdown’s director of money and markets to CNN. “What is being seen is that investors are extremely nervous and that is why (there are) great fluctuations.”
At a press conference on Tuesday afternoon, White House Secretary Karoline Leavitt said China had missed the opportunity to remove a retaliatory rate of 34% imposed on American products on Friday. Thus, the Trump administration almost doubled its additional rate on China on Wednesday morning.
This means that all Chinese products entering the United States will receive a minimum rate of 104%.
