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Europe, Asia stocks rally sharply after Trump pauses most

tariffs

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Chinese equities rise even as US tariffs take hold

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Bond market rout shows signs of stabilising

By Samuel Indyk and Rae Wee

LONDON, April 10 (Reuters) - Global shares surged and a

manic bond selloff stabilised on Thursday after U.S. President

Donald Trump said he would temporarily lower the hefty duties he

had just imposed on dozens of countries.

Following a days-long market rout that erased trillions of

dollars from global stocks and jolted U.S. Treasury bonds and

the dollar, Trump on Wednesday announced a 90-day pause on many

of his new reciprocal tariffs in a shock reversal.

"You've had a relief rally after the realisation that market

pressure is something that resonates with the U.S. president,"

said George Lagarias, chief economist at Forvis Mazars.

"The key takeaway here is that there are limits and

thresholds that he (Trump) will likely respect," Lagarias added.

Trump's reversal pushed equities higher across the globe,

starting with a 9.5% rally in the S&P 500 on Wednesday.

European shares are following suit on Thursday. The

pan-continental STOXX 600 is up 5.3%, on track for its

biggest one-day gain since March 2020.

Major indexes in London, Paris and Frankfurt

are up between 4.1% and 5.6%.

In Asia, Japan's Nikkei advanced more than 8%, while

a broader gauge of Asia-Pacific stocks excluding Japan

rose 4.4%.

But Wall Street futures took a breather after the towering

rally, as investors struggled to come to terms with the U.S.

administration's economic policies.

"The world, political and financial is looking on with

horror, not bemusement, at an administration that prioritises

the signing of an executive order for more water-power in shower

heads, on the same day that the bond market breaks and investors

question the long-term credibility of the administration having

flip-flopped on the largest of their policies, tariffs," said

Martin Whetton, head of financial markets strategy at Westpac.

Nasdaq futures fell 2% and S&P 500 futures

were off 1.7%.

Both indexes had clocked their biggest daily percentage

gains in more than a decade during Wednesday's cash session.

The dollar weakened around 0.9% against both the yen

and the Swiss franc, failing to sustain its

jump against the two safe-haven currencies in the previous

session.

"I think the initial move was just massive short cover, and

this has given the world a bit of a breathing space, except for

China... because markets were starting to price in the

worst-case scenario," said Khoon Goh, head of Asia research at

ANZ.

Trump's reversal on the country-specific tariffs is not

absolute. A 10% blanket duty on almost all U.S. imports will

remain in effect, the White House said. The announcement also

does not appear to affect duties on autos, steel and aluminium

that are already in place.

He also heaped pressure on China, saying he would raise the

tariff on Chinese imports to 125% from the 104% level that came

into effect on Wednesday.

China on Wednesday raised additional duties on American

products to 84% and imposed restrictions on 18 U.S. companies,

mostly in defence-related industries.

Yet investors for now seemed to view the latest escalation

of Sino-U.S. trade tensions with a narrow lens, choosing merely

to focus on the 90-day window Trump has granted to dozens of

countries.

China's CSI300 blue-chip index rose 1.3%, while

Hong Kong's Hang Seng Index advanced 2%.

"I guess at least the relief is now global trade won't grind

to a complete halt," said Wong Kok Hoong, head of equity sales

trading at Maybank.

"The China + 1 supply chain route (is) still intact. As the

rest of the world will be at workable 10% tariffs for 90 days,

companies/businesses have time/alternatives to adjust

supply chain routes."

Still, the onshore yuan fell to its weakest level

since December 2007 at 7.3518 per dollar.

Prior to market opening, the People's Bank of China (PBOC)

set the midpoint rate, around which the yuan is

allowed to trade in a 2% band, at its lowest level since

September 11, 2023.

BONDS SELLOFF

A steep selloff in U.S. bonds this week also showed some

signs of easing on Thursday.

The benchmark 10-year Treasury yield dropped 10

basis points (bps) to 4.2985%, having touched a high of 4.5150%

in the previous session.

A violent U.S. Treasury selloff in the previous sessions,

evoking the COVID-era "dash for cash", had reignited fears of

fragility in the world's biggest bond market.

"It makes sense to apply some uncertainty discount on U.S.

risk assets," said Forvis Mazars's Lagarias.

German Bunds, which had acted as the lone safe haven in the

bond markets, sold off on Thursday. The 10-year yield

was up 8 bps at 2.659% while the two-year

rose 14 bps to 1.855%.

Elsewhere, oil prices fell as investors fretted about the

continued growth shock from the worsening Sino-U.S. trade war.

Brent crude futures were down 2.3% at $63.97 per barrel, while

U.S. crude fell 2.2% to $60.95.

Spot gold extended its climb and was last up 0.9% at

$3,109 an ounce.