Asian and European stocks join US relief rally after Trump tariff pause

Japan leads Asian markets after S&P 500 Index recorded its best gains since financial crisis on Wednesday

Japan's Nikkei Stock Average rallied on Thursday. AP

Stocks in Asia posted the biggest jump in two years, while shares in the Middle East and Europe surged, joining a Wall Street relief rally after US President Donald Trump paused some of his sweeping tariffs for 90 days.

The European Union also announced that it will delay for 90 days the implementation of its counter tariffs against the US over the 25 per cent duties Mr Trump imposed on the bloc’s steel and aluminum exports last month.

“We want to give negotiations a chance,” European Commission President Ursula von der Leyen said on Thursday. “If negotiations are not satisfactory, our countermeasures will kick in,” she wrote on X. “Preparatory work on further countermeasures continues. As I have said before, all options remain on the table.”

Equity benchmarks across Asia rallied after tumultuous trading last week when a rise in tariff threats from Washington and Beijing sent stocks spiralling to record losses.

Japan's Nikkei 225 Index, which slumped more than 3 per cent on Wednesday, rallied 9.13 per cent on Thursday. South Korea's Kospi recovered from a 1.5 per cent fall to surge 6.75 per cent, while Taiwan’s equity benchmark, which fell into bear territory, surged more than 9 per cent. The equity gauge in Australia also jumped more than 4.47 per cent, while shares in Hong Kong's Hang Seng rose 2.54 per cent.

China’s Shanghai Composite Index also added 1.16 per cent despite the impending trade war with a stimulus package from Beijing expected to offset the impact of increased US tariffs on the world’s second largest economy.

Stocks gauges in the Middle East also advanced, with the Dubai Financial Market General Index gaining 1.7 per cent. The Abu Dhabi Securities Exchange climbed 0.7 per cent, while Saudi Arabia's Tadawul added 3.66 per cent. Stock indexes in Kuwait and Qatar rose 1.2 per cent and 1.9 per cent, respectively.

Trading Day: Donald Trump’s tariff pause ignites major market surge

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The broader recovery in stocks in Asia and the Middle East follows a sharp bounce back in US financial markets following the tariff suspension announcement on Wednesday. It comes after the biggest two-day wipeout in the history of US stocks last week, with a combined $6.6 trillion in value erased on Thursday and Friday.

The tech-heavy Nasdaq Composite Index ended trade with more than 12 per cent gains, while the S&P 500 Index surged 9.25 per cent, its best showing since the global financial crisis. The Dow Jones Index rallied 7.87 per cent.

Mr Trump on Wednesday ordered a 90-day pause on so-called reciprocal tariffs on all countries except China.

The announcement followed warnings from Mr Trump’s billionaire-backers and business leaders of a potential recession caused by the US administration's push for tariffs.

“I have authorised a 90-day pause, and a substantially lowered reciprocal tariff during this period, of 10 per cent, also effective immediately,” Mr Trump wrote on social media.

However, he raised duties on Chinese imports from 104 per cent to 125 per cent after China increased tariffs on US good to 84 per cent.

“Based on the lack of respect that China has shown to the world’s markets, I am hereby raising the tariff charged to China by the United States of America to 125 per cent, effective immediately,” he said.

Treasury Secretary Scott Bessent later clarified that Mr Trump is maintaining the 10 per cent tariff on nearly all global imports. He said at the White House that the market did not understand the higher tariffs as “those were maximum levels”.

“We think Trump blinked, and the probability of a ‘contained damage’ scenario is rising,” Homin Lee, a senior macro strategist at Lombard Odier in Singapore, told Bloomberg. “We expect Europe and Asia to echo the US relief rally. The punitive tariff rate on China is mostly symbolic at this point.”

European stock climb

The relief rally in equity markets also spread to European stock markets.

European equity markets rallied when they opened, with Euro Stoxx 50 Index adding 5.4 per cent and the FTSE 100 Index in London advancing 4.23 per cent. Stocks measures in Germany and France also advanced 4.6 per cent 4.36 per cent, respectively.

Stocks futures of the S&P 500 and the Nasdaq 100, however, were 1.98 per cent and 2.39 per cent lower, respectively, after the markets posted record gains a day earlier.

“There’s still an awful lot of volatility to come,” Ben Bennet, head of investment strategy for Asia at L&G, told Bloomberg. “I still think we’re in this correction. So that’s why we would be a seller on strengths.”