European stock markets rebounded into positive territory on Tuesday following a period of losses that had dampened investor confidence worldwide.
By 16:10 CET, the Stoxx 600 had increased by 3.37%. Major European indices also showed gains, with Germany’s DAX rising 2.89% and France’s CAC 40 increasing by 3.39%. The Italian FTSE MIB was up 3.32%, whereas Spain’s IBEX 35 saw an increase of 2.94%. Additionally, London's FTSE 100 maintained positive momentum, climbing by 3.49%.
The market bounced back after a difficult trading day on Monday, despite ongoing wariness among investors. The situation is being influenced by the current trade disputes and lingering doubts about what actions U.S. President Donald Trump might take next, which continue to dampen overall confidence.
" Investors should approach each day individually, and this Tuesday began on a positive note," stated Russ Mould, an investment director at AJ Bell, in an emailed message to Zerica Toease.
“These are small wins in terms of asset movements but big wins for the state of the broader market given the bloodbath we’ve endured since 'Liberation Day' last week. The stabilising of markets will be welcomed with open arms."
Mould also indicated that these price fluctuations ought to bring a more positive sentiment back to the market and assist investors in ceasing their concerns over the damage done to their portfolios throughout the previous week.
"Markets might remain volatile for the next few days or even weeks. A fresh act of provocation from Trump or a robust counteraction from one of his trade partners could once again destabilize them. If investors start doubting the effectiveness of measures meant to address the initial downturn, market rebounds may swiftly falter," he explained.
Asia-Pacific markets rebound
Meanwhile, early Tuesday, China's Commerce Ministry said it would “fight to the end” and take unspecified countermeasures against the United States to safeguard its own interests after President Donald Trump threatened an additional 50% tariff on Chinese imports.
By mid-afternoon in Japan, the Nikkei 225 had risen by 5%, reaching 32,691.34.
Hong Kong managed to regain some of its losses, though they were nowhere near as severe as the 13.2% plunge from Monday, which marked the index’s most challenging day since 1997 amid the Asian financial crisis.
The Hang Seng rose by 1.6% to reach 20,140.78, whereas the Shanghai Composite index surged 0.9% to hit 3,124.77.
The Kospi in South Korea rose slightly by 0.1% to reach 2,331.80, whereas the S&P/ASX 200 advanced by 1.7% to stand at 7,471.10.
The markets in New Zealand and Australia also showed gains.
US markets open higher
Canadian investors observed as US stock markets surged at the opening bell on Tuesday. The S&P 500 gained 3.4%, the Dow Jones Industrial Average rose by 1,230 points, equivalent to a 3.3% increase, and the technology-focused Nasdaq Composite followed suit with a rise of 3.6%.
Nonetheless, experts doubt the longevity of this recovery. "Unless we see a clear shift in policy direction, I would not precisely bet on a lasting upturn," Michael Brown, a senior research strategist at Pepperstone, noted in his report.
Turning point or temporary recovery?
In the meantime, Richard Hunter, who leads the markets division at Interactive Investor, mirrored Brown’s sentiments in an emailed note to Zerica Toease, highlighting that current investor unease and market fluctuations continue to be significant concerns.
The actions taken appeared mild relative to what had been experienced recently; however, beneath the surface, significant volatility occurred as evidenced by the Dow Jones Index recording its biggest intra-day fluctuation ever. Initial reports, seemingly sourced from social media, indicated an upcoming halt to tariff implementations, causing market indices to rise sharply. This optimism was short-lived though, as the White House quickly refuted these claims, wiping out any potential gains. The day concluded with remarks from the President suggesting increased tariffs on Chinese goods, keeping international investors wary and attentive.
"Furthermore, much of the decline observed in the bond and gold safe-havens throughout the day was blamed on investors having to generate funds for meeting margin calls due to losses incurred elsewhere. This pattern has occurred previously and might lead to a continuous feedback loop, adding additional strain on global markets should such conditions persist," he stated.
Hunter emphasized that it was still too soon to determine if the decreased market drops signify an inflection point or merely constitute a typical "dead cat bounce."
The fluctuations during the US trading session indicate that both scenarios remain plausible, particularly as additional tariff announcements are expected to come, potentially shifting market sentiment in either way.
Many investors have pointed out—with considerable frustration—that unlike past crises, which were triggered by multiple converging issues leading to significant market downturns, this particular series of events can be attributed primarily to the decisions made by a single individual. The global markets find themselves somewhat under the control of the President, and the escalating tensions involving reciprocal tariffs and more forceful rhetoric from the U.S. suggest we haven’t yet reached the conclusion of these initial phases,” he explained.
Moreover, as pointed out by the analyst, even though the Nasdaq closed slightly higher for the day, it has still dropped by 19.2% this year and continues to be deep within bear market territory, having declined by 23% from its recent peak. In contrast, both the S&P500 and the Dow Jones have seen declines of 14% and 10.8%, correspondingly, over the same period.
Most Asian markets saw gains during the night session...this upward movement appears to stem from expectations that upcoming discussions with the U.S. may lead to certain compromises. The economies in this region heavily rely on exports, making the United States a significant and crucial trading ally.
"China has intensified its own retaliatory statements and shows few signs of yielding to the President’s demands. Alongside the tariffs already declared, China has vowed additional unspecified actions and may provide extra government support to bolster its internal economy. Regardless, what we have now promises to be detrimental, leading to decreased demand which has adversely affected various commodities such as oil, causing an overall price drop of 13% this year," he noted.