European stock markets rebounded sharply in early deals on Thursday after US President Donald Trump abruptly paused steep tariffs on most countries.
Frankfurt jumped more than seven percent to 21,124.44 points almost a half hour into trading, Paris gained 7.3 percent to 7,362.06 and London surged 5.3 percent to 8,089.72 following rallies on Wall Street and in Asia.
European markets had fallen around three percent on Wednesday after Trump’s punishing tariffs came into force and China retaliated with its own massive duties against US levies.
But Trump back tracked after European stock markets closed, suspending the higher tariffs against all countries except China.
The US leader, however, left a baseline 10 percent tariff intact and ramped up his trade war with Beijing by hiking tariffs against Chinese goods to 125 percent.
“While there has been understandable relief… the genie is still out of the bottle on policy unpredictability,” said a Deutsche Bank analysis.
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“A 10 percent minimum universal tariff represents the largest tariff increase in decades and heightened trade uncertainty is likely to linger, with limited visibility on what kind of deals the US would find acceptable,” it said.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the “red line” for Trump was a selloff of US government bonds.
“The fire sale in US Treasuries dialled up the pressure to a point that apparently became unbearable — even for Trump,” she said.
