A look at the day ahead in European and global markets from Rae

Wee

Asian stocks and European stock futures surged on

Thursday, joining the relief rally over a 90-day reprieve on

most new U.S. tariffs, but that policy reversal excluded China,

where an intensifying trade war signalled more trouble ahead for

markets.

Indeed, the dollar struggled to hold overnight gains,

particularly against the safe-haven yen and Swiss franc, and

U.S. stock futures turned lower after a brief early rally, a

potential warning of wavering investor confidence in the U.S.

economy.

As economists at J.P. Morgan put it, this is "merely the end

of the beginning", and the U.S. war on trade is far from over.

Wall Street indexes logged their largest daily percentage

gains in more than a decade overnight, relieved that, with U.S.

President Donald Trump's latest U-turn on tariffs, global trade

was no longer about to grind to a complete halt.

But the gloves have come off between the world's two trade

powerhouses, with Trump dealing an explicit blow to China by

raising the levy on Chinese imports to 125%, up from the 104%

duty that came into effect on Wednesday.

China had raised additional duties on American products to

84% and imposed restrictions on 18 U.S. companies.

By contrast, Vietnam - a huge beneficiary of global

manufacturers' "China plus one" strategy that aims to diversify

supply chains - said on Thursday it had come to an agreement

with the United States to launch negotiations for a trade pact.

Chinese stocks opened on a strong note on Thursday and Hong

Kong's Hang Seng Index surged 4%, even as the onshore

yuan tumbled to its weakest level in more than 17

years.

Some analysts attributed the rise to hopes for talks between

the world's two largest economies, as well as support from

Beijing for the markets and the economy.

A manic bond selloff also stabilised on Thursday as U.S.

Treasury yields retreated, after heavy selling in the previous

sessions had reignited fears of fragility in the world's biggest

bond market.

In other news, the March report on U.S. inflation is due

later on Thursday, although it will likely be of less importance

to markets given the figures mostly predate the latest round of

hefty levies imposed by Trump.

Still, an upside surprise could be nasty, given it would be

just a taste of the sharp price increases coming once tariffs

fully kick in.

Key developments that could influence markets on Thursday:

- Tariff news

- U.S. inflation data (March)

Trying to keep up with the latest tariff news?

Our new daily news digest offers a rundown of the top

market-moving headlines impacting global trade. Sign up for

Tariff Watch here.