European stocks surge most since 2020; gold gains

The reprieve possibly underscores the pressure markets brought to bear on Trump and his bid to remake the world trading order with levies at 100-year highs

European stocks opened sharply higher, tracking Wall Street’s late-Wednesday rally, after President Donald Trump paused most of his sweeping tariff hikes. US equity futures fell, however, suggesting the euphoria is already dissipating.

The Stoxx 600 rose more than 7% at open, the biggest intraday gain since 2020, and Asian stocks advanced. In the US, S&P 500 futures slipped 0.6%. Yields on 10-year Treasuries steadied, dollar retreated for the third day in a row and gold climbed.

Trump’s pivot came as the scale of the Treasuries selloff and days of mounting financial stress rattled investors, as well as a recession warning from Jamie Dimon, the chief executive of JPMorgan Chase & Co. The reprieve possibly underscores the pressure markets brought to bear on Trump and his bid to remake the world trading order with levies at 100-year highs.

While the president announced a 90-day pause on higher tariffs on dozens of trade partners, he raised duties on China further to 125% after Beijing imposed retaliatory measures. China’s top leaders are poised to meet Thursday to discuss additional economic measures, sparking in rally in local shares on expectations for more stimulus.

“We think Trump blinked, and the probability of a ‘contained damage’ scenario is rising,” said Homin Lee, a senior macro strategist at Lombard Odier Ltd. in Singapore. “The punitive tariff rate on China is mostly symbolic at this point.”

While the pause on tariff hikes fueled huge rallies late on Wednesday, many traders are confronting the possibility that trade-linked volatility could be just beginning.

Treasury yields were down about one basis point, paring a bigger drop seen in Asian trading. Wednesday’s sale of 10-year notes drew good demand, soothing concerns that Trump’s policies might deter foreign buyers. A selloff in British bonds also abated.

Meanwhile, German bonds fell as the tariff delay caused traders to pare bets on European Central Bank interest-rate cuts. Two-year rates rose as much as 19 basis points.

“The genie is still out of the bottle on policy unpredictability,” Deutsche Bank AG strategists wrote, noting the current 10% universal tariff hike was still the biggest in decades. “Heightened trade uncertainty is likely to linger, with limited visibility on what kind of deals the US would find acceptable.”

In currency markets, all eyes were on the Chinese yuan, which traded at the weakest level since 2007, as speculation swirled on a possible devaluation. Goldman Sachs cut its growth forecasts for China for this year and 2026.