As US President Trump announced a 90-day pause on tariffs in his global relief rally, excluding China, the US stocks surged to historic highs on Wednesday. Meanwhile, the U.S. dollar remained under pressure against the yen and Swiss franc, indicating lingering economic uncertainty and shaking investors’ trust. Economists at J.P. Morgan are calling this situation ‘‘merely the end of the beginning. 

The global relief rally is also speculated to be a decision taken in response to a potential recession situation. Kyle Rodda, an analyst at Capital.com, stated 

“It seems likely that the U.S. President blinked (when) confronted with a potential recession, a political backlash, a near equity bear market, and the early warning signs of a financial crisis,” 

High Stocks, More Tariffs 

As of Wednesday, the S&P 500 skyrocketed 9.52%, marking its sharpest rise since the 2008 financial crisis. The Dow Jones Industrial Average jumped 7.87%, its best performance since March 2020, while the Nasdaq Composite soared 12.16%. However, with the additional tariffs on Chinese imports reaching 125%, the US-China trade war has further escalated. 

China responded with 84% duties on American products, restricting 18 U.S. companies. 

US-Vietnam Negotiation 

As Trump’s aim behind the global relief rally is to bring trading partners to the negotiation table, Vietnam announced to start of trade agreement talks with the U.S. These trade talks reflect broader efforts by the US to reduce its reliance on Chinese manufacturing. It also highlights that other countries may follow suit to initiate negotiations with the U.S., which may bring some certainty to the U.S. stock market. 

What do Investors Need to Look for? 

The temporary surge in U.S. stocks following President Trump’s 90-day tariff pause reflects a fragile relief rally rather than a sustained policy initiative. While stock markets got a sigh of relief, the economic risks persisted with the US-China tariff war. Additionally, with the U.S. dollar strengthening with investors restoring trust, the Chinese yuan hit a 17-year low, indicating heightened tension between China and the US in the coming days.  

In short, markets may face continued volatility as recession fears and currency fluctuation continue.