U.S. stock futures tumbled and the dollar weakened as traders shifted their focus to concern that the trade war will bring lasting damage to the American economy.
S&P 500 futures sank 2%, signaling a sharp pullback from Wednesday’s almost 10% surge, which was triggered by President Donald Trump’s decision to pause most of his tariff hikes. Gold climbed and 10-year Treasury yields dropped in a flight to safe havens. Oil sank, with Brent crude falling below $65 a barrel.
Many strategists warned investors against buying the dip in equities because of the risks ahead. Citigroup Inc. global wealth head Andy Sieg urged clients to stay cautious amid extreme market volatility.
“The damage has been done. They’ve opened Pandora’s box and they can’t undo what’s been done in one statement,” said Colin Graham, head of multi-asset strategies at Robeco Groep. “We would definitely be a bit more of a seller at this point.”
The pivot on tariffs underscores the pressure markets brought to bear on Trump and his bid to remake the world trading order with levies at 100-year highs. The scale of the Treasuries selloff and days of mounting financial stress have rattled investors, while business leaders including Jamie Dimon, the chief executive of JPMorgan Chase & Co., issued recession warnings.
While the 90-day reprieve gives governments time to negotiate with Trump on the levies, it’s likely to extend uncertainty for global businesses and consumers. Trump has also further hiked duties on China to 125%, raising speculation on what measures Beijing might take to ease the economic pressure.
Meanwhile, European and Asian markets soared as investors caught up to the previous day’s rally on Wall Street.
The yuan slipped to the weakest since 2007, as speculation swirled on a possible devaluation. China’s top leaders will meet on Thursday to discuss their next steps.
The current 10% universal tariff hike that remains in place is still the biggest in decades, Deutsche Bank AG strategists wrote, noting Trump’s U-turn shows “The genie is still out of the bottle on policy unpredictability.”
On bond markets, Treasury yields slipped four basis points, paring a bigger drop seen in Asian trading. British bonds also steadied after their selloff.
However, German bonds fell as the tariff delay caused traders to pare bets on European Central Bank interest-rate cuts. Two-year rates rose as much as 19 basis points.
Bond traders will watch a US auction of 30-year Treasuries later Thursday after a strong 10-year note sale soothed concerns that Trump’s policies might deter foreign buyers. The other focus point will be US data which is expected to show consumer inflation data declined in March.
--With assistance from Richard Henderson, Winnie Hsu, Aya Wagatsuma, Joanne Wong, Abhishek Vishnoi and Ruth Carson.
©2025 Bloomberg L.P.
