In the US, stocks saw a wild ride on Monday, seeing $2.4tn in value added on news that President Trump was considering a pause on the latest tariffs, however no sooner had the market jumped the gains were wiped out after the White House denied the headline. Investors remained on edge ahead of Wednesday’s implementation of the new tariffs, however only hours after coming into effect, Trump announced that there would be a 90-day pause on reciprocal tariffs for most countries. In response the Nasdaq Composite surged 12% in its best day since 2001, while the S&P 500 popped 9.5% in its largest gain since 2008. The following session there was a pullback as focus shifted to news that China was not part of the pause and would in fact see its tariff rate rise to 145% on imports.
Overall, despite the volatility, the S&P 500 ended the week 5.7% higher, the Dow Jones Industrial Average was up 5.0% and the tech-heavy Nasdaq gained 7.3%. Gains in small-caps were more muted, with the Russell 2000 up 1.8%. Uncertainty around tariffs and the economic outlook mostly overshadowed the latest inflation data. While on a month-on-month basis the consumer price index rose 0.1%, its lowest reading in nine months, this did not capture the latest tariffs. Treasuries sold off for the week, with yields higher. The 10-year Treasury yield ended up at 4.49% and saw its biggest weekly gain since 2001. The US dollar posted five sessions of losses in its worst week since 2022, down around 2.5% against its peers.
European equity markets also saw a strong jump on Thursday following the tariff suspension, however this was not enough to keep indices from weekly losses. The pan-European STOXX 600 lost 1.8% in its third week of declines, and regional indices were also lower. The European Central Bank (ECB) stepped up its monitoring of financial institutions and markets in response to the market gyrations. This week the ECB will meet and is largely expected to cut interest rates by a quarter-point, with attention being on the economic outlook it provides in the face of tariffs.
Chinese markets had been trading higher for most of the week, however steep losses experienced on Monday meant that they were unable to avoid weekly declines. On Monday the Hang Seng index plunged 13.2% in its worst session since 1997, amid the escalating trade war. China announced on Friday that it would increase the levy on US imports to 125% from 84%. On the more positive side of things, the potential impact on China’s economy raised expectations that Beijing may step up its stimulus measures. For the week the Shanghai Composite was down 3.1%, while the Hang Seng lost 8.4%. Japanese equities were slightly lower, with the Nikkei 225 losing 0.6%, while the yen strengthened against the US dollar as investors looked to safe havens. On safe havens, gold ended at a fresh high, seeing a weekly gain of 6.3%.