Asian stocks join relief rally on Trump's 90-day tariff pause, treasuries gain

Trump announced a 90-day pause on the so-called reciprocal tariffs that hit dozens of trade partners after midnight, while raising duties on China to 125%.

Stocks in Asia joined a relief rally that helped US shares post their best day since the global financial crisis after US President Donald Trump paused most of his tariffs. Treasuries rallied after a tumultuous session.

Indexes across the region advanced Thursday and equity-index futures for Europe surged more than 9% after the S&P 500 rallied 9.5% Wednesday. A gauge of the dollar slipped for a third day while yields on the 10-year US Treasuries edged lower in early Asian trading.

Trump announced a 90-day pause on the so-called reciprocal tariffs that hit dozens of trade partners after midnight, while raising duties on China to 125%.

Moves in Asia extended the volatile trading across global markets over the past week as investors grappled with the fallout from Trump’s country-specific tariffs and sudden policy changes. Billionaire investors had condemned the levies, economists predicted a recession for US economy and strategists trimmed their forecasts for stocks as the president sought to remake the world trading order.

“Investors across Asia and beyond a breathing a sigh of relief,” said Frederic Neumann, chief Asia economist at HSBC Holdings Plc. “The postponement of reciprocal tariffs by the US allows more time for negotiations. For export-centred Asian economies this is especially important, given the growth impact steep US tariffs would have had.”

Trump called the world’s biggest debt market a thing of beauty on Wednesday as his about-face on trade policy sparked huge swings in bonds. The yield on short-dated US debt jumped sharply as equities rallied while that on 30-year debt fell by a smaller margin.

Wednesday’s declines for short-dated Treasuries, a popular place investors have parked capital during market turmoil, were amplified as investors dumped havens on fear of missing out on the equity rebound. The yield on two-year Treasuries had soared higher by as much as 30 basis points, as traders trimmed rate-cut bets. The US 10-year yield ended Wednesday four basis points higher after an intraday selloff that began in Asia and at one point added 22 basis points to the yield.

“It’s been a roller-coaster ride for the past week and we know one thing is for certain: if there’s any certainty in investing, that one certainty is that markets and investors don’t like uncertainty,” said Ryan Nauman at Zephyr. “That’s what we’ve seen — the tariffs have been unpredictable. And now we’re seeing the bounce today, which I think is really a relief rally, buying the dip.”

Less than an hour before Trump’s remarks, a $39 billion sale of 10-year notes drew good demand — despite concern by some in the market that his policies might deter foreign buyers. That followed a tepid reaction to a sale of three-year notes on Tuesday, and paints a rosier backdrop for Thursday’s 30-year bond auction.

The recovery in stocks came about three hours after Trump urged Americans to stay calm and continue investing, posting on social media that “this is a great time to buy.” It followed days of mounting market stress in everything from money markets to credit spreads and a chorus of pleas from Trump’s billionaire allies that he pause the implementation of his global tariff program.

Amid the volatility of previous sessions some market-watchers counseled caution in reading too much into the bull case. Trump’s tariff threats may have damaged the ability of corporate managers to plan for the future and dented international relations to a point where global economic growth remains in lasting doubt.

“The 90-day pause is an encouraging sign that negotiations with most countries have been productive,” said Mark Hackett at Nationwide. “It also injects some much-needed stability into a market rattled by uncertainty. That said, we’re not out of the woods yet. Avoid the temptation to chase momentum and keep emotions in check.”

Goldman Sachs Group Inc. economists rescinded their forecast for a US recession after Trump announced a 90-day pause on most of his previously-announced tariffs.

“Earlier today, before President Trump’s announcement, we had shifted to a recession baseline in response to the additional country-specific tariffs that went into effect this morning,” the Goldman Sachs team, led by Jan Hatzius, said Wednesday in a note. “We are now reverting to our previous non-recession baseline forecast.”

In commodities, oil steadied after a rebound from a four-year low. Gold edged higher after posting its biggest one-day gain in 18 months.