Asia Shares Surge as U.S. Stocks Soar Following Trump's Tariff Pause

TOKYO (AP) — Early Thursday trading saw Asian stocks rise sharply, with Japan’s main index leaping over 2,000 points right when the Tokyo stock exchange opened, as traders responded positively to U.S. President Donald Trump’s move to retract most of his tariff plans.

Analysts anticipated this local recovery since U.S. stocks experienced one of their most impressive gains ever on an enthusiastic Wall Street following Wednesday’s trading session, driven by investors' expectations that Trump might reduce his tariff rhetoric.

Thursday saw Japan’s key Nikkei 225 surge by 8.8%, reaching 34,510.86 when trading opened, rocketing upwards instantly. In Australia, the S&P/ASX 200 climbed sharply by 5.1% to hit 7,748.00. Meanwhile, South Korea’s Kospi added 5.2% to stand at 2,412.80. Trading was about to commence in both Hong Kong and Shanghai; noteworthy is that over the past five days, the Hang Seng index had dropped significantly and might now experience an upturn similar to other indices across the region.

Stephen Innes, the managing partner at SPI Asset Management, described the shift as moving "from fear to euphoria."

"It has become a controllable risk, particularly as the global recession hedges unwind, allowing many of Asia's exporters to feel considerably relieved," he stated, commenting on the tariffs imposed on China, which President Trump maintained.

On Wall Street, the S&P 500 jumped by 9.5%, which is typically considered a strong yearly gain for the stock market. Earlier in the day, it was declining due to concerns that President Trump's trade conflict might push the global economy into a downturn. However, later on, a post appeared on social media platforms that many investors globally were eagerly anticipating and hoping for.

"I have approved a 90-day HALT," Trump stated following acknowledgment of over 75 nations that he mentioned were engaged in trade negotiations without responding to his recent tariff hikes.

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% tariff on nearly all global imports.

Although China stood out as a significant case, Trump stated that tariffs would be increased to 125% on goods from the country. This increases the likelihood of further fluctuations that might shock financial markets. The trade conflict remains unresolved, and an intensifying dispute between the globe's top two economic powers has the potential to cause considerable harm. Additionally, U.S. stock prices have yet to recover to their levels from just last week when Trump declared global tariffs under what he termed "Liberation Day."

However, on Wednesday, the attention on Wall Street was predominantly optimistic. The Dow Jones Industrial Average surged by 2,962 points, marking a rise of 7.9%. Meanwhile, the Nasdaq composite jumped by 12.2%, and the S&P 500 experienced its third most successful day since 1940.

The reassurance arrived following concerns that had emerged regarding whether Trump was concerned about the economic distress caused to the US stock market due to his tariff policies. The S&P 500, which often serves as the core component for numerous 401(k) portfolios, opened the day approximately 19% lower than its all-time high recorded barely six weeks prior.

This astonished numerous professional investors who believed that a president with a history of boasting about record highs for the Dow during his administration would have adjusted his policies if they caused the market to decline sharply.

Thursday's rally helped pull the S&P 500 index back from the brink of what traders refer to as a "bear market." This term is used when a typical decline of around 10% in U.S. stock values—something that occurs annually or so—evolves into a sharper decrease of 20%. Currently, the index stands at an 11.2% dip below its peak level.

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

Experts suggest multiple factors might explain the increase in yields, such as hedge funds and various investors offloading their Treasury bonds to generate liquidity amid equity-market losses. Additionally, foreign entities holding U.S. Treasuries could be divesting due to the ongoing trade conflict. These sales activities decrease bond values, consequently elevating yield rates.

Despite the underlying causes, increased returns on Treasury securities exert downward pressure on the stock market and lead to higher interest rates for home mortgages and various loans for American families and enterprises.

These movements are significant because U.S. Treasury yields typically decrease—not increase—during turbulent periods in the financial markets since these bonds are generally considered among the safest investment options. The substantial climb this week has pushed the yield on the 10-year Treasury back up to levels last observed at the end of February.

Following an early rise above 4.50%, the 10-year yield retreated to 4.34% after Trump halted his comments and post the Treasury's auction. This rate remains higher than 4.26% recorded late Tuesday and significantly up from 4.01% at the close of last week.

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Stan Choe, an AP Business Writer, provided contributions.