ASX gains more than $110 billion as market goes from fear to frenzy

“I have authorised a 90-day PAUSE,” Trump said in his post on his social platform Truth Social, after recognising the more than 75 countries that he said had been negotiating on trade and had not retaliated against his latest increases in tariffs.

US Treasury Secretary Scott Bessent later told reporters that Trump was pausing his so-called “reciprocal” tariffs on most of the country’s biggest trading partners, but maintaining his 10 per cent tariff on nearly all global imports, including those from Australia.

‘As welcome as the announcement was, investors can’t assume it’s the end of the tariff story, or that the market’s day-to-day volatility will disappear.’

Daniel Skelly, Morgan Stanley

It was a starkly different story for China though, though, with Trump saying tariffs are going up to 125 per cent against its products. That raises the possibility of more swings ahead that could stun financial markets. The trade war is not over, and an escalating battle between the world’s two largest economies can create plenty of damage. US stocks are also still below where they were just a week ago, when Trump announced worldwide tariffs in what he called “Liberation Day”.

But overnight, at least, the focus on Wall Street was on the positive.

“The tariff clouds parted for the first time today,” said Daniel Skelly, head of the wealth management market research and strategy team at Morgan Stanley.

“But it’s too soon to know how sunny the skies will be tomorrow – or 90 days from now… As welcome as the announcement was, investors can’t assume it’s the end of the tariff story, or that the market’s day-to-day volatility will disappear.”

The relief came after doubts had crept in about whether Trump cared about the financial pain the US stock market was taking because of his tariffs. The S&P 500, which sits at the centre of many pension fund accounts, came into the day nearly 19 per cent below its record set less than two months ago.

That surprised many professional investors, who had long thought that a president who used to crow about records for the Dow under his watch would pull back on policies if they sent markets reeling.

Wednesday’s rally pulled the S&P 500 index away from the edge of what’s called a “bear market”. That’s what professionals call it when a run-of-the-mill drop of 10 per cent for US stocks, which happens every year or so, graduates into a more vicious fall of 20 per cent. The index is now down 11.2 per cent from its record.

Wall Street also got a boost from a relatively smooth auction of US Treasurys in the bond market on Wednesday. Earlier jumps in Treasury yields had rattled the market, indicating increasing levels of stress. Trump himself said on Wednesday that he had been watching the bond market “getting a little queasy”.

Analysts say several reasons could be behind the rise in yields, including hedge funds and other investors having to sell their Treasury bonds to raise cash to make up for losses in the stock market. Investors outside the United States may also be selling their US Treasurys because of the trade war. Such actions would push down prices for Treasurys, which in turn would push up their yields.

Regardless of the reasons behind it, higher yields on Treasurys add pressure on the sharemarket and push upwards on rates for mortgages and other loans for US households and businesses.

The moves are particularly notable because US Treasury yields have historically dropped – not risen – during scary times for the market because the bonds are usually seen as some of the safest possible investments. This week’s sharp rise had brought the yield on the 10-year Treasury back to where it was in late February.

After approaching 4.5 per cent in the morning, the 10-year yield pulled back to 4.34 per cent following Trump’s pause and the Treasury’s auction. That’s still up from 4.26 per cent late on Tuesday and from just 4.01 per cent at the end of last week.

Of course, the trade war is not over. Bessent and Trump clearly showed their anger at China, which has been ratcheting up its own tariffs on US goods and announcing other countermeasures with each move Trump has made.

China earlier said it would raise tariffs on US goods to 84 per cent on Thursday. “If the US insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end” the Ministry of Commerce said.

Later the US Treasury secretary said in a message to countries worldwide, but perhaps most directly aimed at China: “Do not retaliate, and you will be rewarded.”

On Wall Street, the gains were widespread across the US sharemarket, and 98 per cent of the stocks in the S&P 500 index rallied.

Leading the way were airlines and other stocks that need customers feeling confident enough to travel for work or for vacation. Delta Air Lines soared 23.4 per cent. Earlier in the day, it had pulled financial forecasts for 2025 as the trade war scrambles expectations for business and household spending and depresses bookings across the travel sector.

In other international markets, indexes tumbled across most of Europe and much of Asia after they closed before Trump’s announcement. London’s FTSE 100 dropped 2.9 per cent, Tokyo’s Nikkei 225 sank 3.9 per cent and the CAC 40 fell 3.3 per cent in Paris. Chinese stocks were an outlier, and indexes rose 0.7 per cent in Hong Kong and 1.3 per cent in Shanghai.