Tariff Rollercoaster: A Surge in US Stocks Amidst Uncertain Future

On Monday, US stock markets saw a noticeable rise following an announcement from the White House that tariffs on imported Chinese electronics like smartphones would be postponed. This unforeseen rollback was issued just before the weekend and could be temporary, as President Trump indicated these products might still face tariffs under a different category

Despite this rebound, global markets have yet to recover from the historic declines that followed Trump’s initial tariff announcements on April 2. The UK’s FTSE 100 rose by 2.1%, while stock indexes in both France and Germany also posted gains. However, over the past month, major indexes like the S&P 500 and the FTSE 100 remain down by 4.3% and 5.8%, respectively.

Investors showed relief at the news, as it provided a rare moment of positive sentiment amid ongoing trade tensions. Tech stocks were particularly buoyed, with companies like Apple seeing a gain of 5% early in trading, before settling at a 2.2% increase. Chip maker ASML and Dell also experienced share price increases.

Danni Hewson from AJ Bell noted that this positive turn in tariff news brought a temporary sense of relief, with the market responding favorably even as uncertainties linger. Sree Kochugovindan from Aberdeen Group cautioned that although there was some relief from the tech exemptions, volatility might persist due to the unclear future of tariffs following the 90-day pause.

In contrast, the value of the US dollar continued to decline, falling 0.8% against the British pound as it grapples with concerns over the US economy, which seems to be damaging the dollar’s long-held reputation as a safe haven. Meanwhile, bond markets showed relative stability, with US government interest rates remaining elevated.

Economists emphasize that while Trump and his supporters view the volatility as a transition towards more American labor, many believe the path to reviving US manufacturing could span decades. Moreover, the ongoing uncertainties surrounding tariffs are perceived to weaken the US economy in the interim.