Markets calmer to begin trading day, but U.S.-China threats loom large

Thomson Reuters

· Posted: Apr 08, 2025 7:08 AM EDT | Last Updated: 11 minutes ago

World markets won a reprieve connected Tuesday aft 3 days of dense selling that wiped trillions of dollars disconnected the worth of shares, arsenic China vowed to "fight to the end" against further U.S. tariffs imposed connected Beijing. 

But little than a week since U.S. President Donald Trump unleashed sweeping reciprocal tariffs that sent satellite markets into a tailspin, the temper remained fragile.

The VIX stocks volatility index, often referred to arsenic Wall Street's fearfulness gauge, remained elevated astatine astir 44 points — albeit disconnected Monday's highest conscionable supra 60.

U.S. 10-year Treasury yields were dependable aft posting their biggest one-day leap successful a twelvemonth connected Monday. Analysts said a fig of reasons whitethorn person explained the crisp emergence successful U.S. enslaved yields connected Monday including investors selling their astir liquid assets to marque up for falls elsewhere.

The American dollar, which has taken a beating from the tariff turmoil, remained anemic against different large currencies. Safe haven currencies, including the yen and the Swiss franc, held adjacent six-month highs to commencement Tuesday.

Japan's blue-chip Nikkei banal scale closed six per cent higher, portion successful Europe shares roseate from 14-month lows and markets successful London, Paris and Frankfurt were up much than 1 per cent.

"Sentiment is rebounding, possibly connected the presumption that Trump whitethorn absorption protectionism connected China and velocity up commercialized deals elsewhere," said Francesco Pesole, currency strategist astatine ING. "Markets whitethorn beryllium erring connected the optimistic broadside though."

'Battle of wills' shaping up: analyst

China's markets roseate lone modestly aft the country's sovereign wealthiness funds stepped successful to bargain shares. Chip-export-dependent Taiwan's benchmark tumbled five per cent, a time aft suffering its worst autumn connected record.

The Chinese yuan fell to 7.3677 per dollar successful the offshore market, the weakest successful 2 months, earlier rebounding to beryllium somewhat stronger than Monday's adjacent astatine 7.3393.

WATCH l U.S.-China commercialized warfare would beryllium 'sand successful the gears' of satellite economy, expert says: 

Trump dug successful his heels implicit China, vowing further 50 per cent levies if Beijing does not retreat the retaliatory tariffs of 34 per cent it announced past week for the United States. If Trump sticks to his plan, total caller U.S. duties connected Chinese goods this twelvemonth could emergence to 104 per cent by Wednesday.

Trump imposed little expansive tariffs connected China successful his archetypal word arsenic president, immoderate of which successor Joe Biden maintained.

But with planetary proviso chains successful jeopardy, Beijing is nether unit to respond.

"The U.S. side's menace to escalate tariffs against China is simply a mistake connected apical of a mistake, erstwhile again exposing the American side's blackmailing nature," China's commerce ministry said successful a statement.

"If the United States insists connected having its way, China volition combat to the end."

LISTEN l Bloomberg Odd Lots podcast big Joe Weisenthal connected marketplace turmoil: 

Trump's affinity for tariffs risks derailing China's mostly export-led economical betterment fixed that nary different state comes adjacent to the depletion powerfulness of the U.S., wherever Chinese producers merchantability much than $400 cardinal worthy of goods annually.

"If the tariffs support going up and up, it becomes a conflict of wills and principles alternatively than economics," said Xu Tianchen, elder economist for China astatine the Economist Intelligence Unit.

Trump's tariffs volition beryllium felt peculiarly keenly arsenic they people the 2 main strategies Chinese exporters person utilized to blunt the interaction of the commercialized war: shifting immoderate accumulation overseas and boosting income to non-U.S. markets.

Chinese President Xi Jinping this period is scheduled to sojourn Malaysia, Vietnam and Cambodia, 3 economies that gained from relocation by Chinese manufacturers to debar U.S. sanctions during Trump's archetypal term, but which present look steep levies of their own.

EU prepares effect to looming levy

European Commission President Ursula von der Leyen successful a telephone telephone with China's Premier Li Qiang called connected Beijing to guarantee a negotiated solution and stressed the request to enactment a just trading strategy founded connected a level playing field

The European Commission said connected Monday it had offered a "zero-for-zero" tariff woody to avert a commercialized warfare with the United States. The committee projected counter-tariffs of 25 per cent connected a scope of U.S. goods including soybeans, nuts and sausages, though different imaginable items similar bourbon whiskey were near disconnected the list, a papers seen by Reuters showed.

WATCH l Monday recap: Bruising time connected markets, Wall Street warns of recession: 

The 27-member EU bloc is struggling with tariffs connected autos and metals already successful place and faces a 20 per cent tariff connected different products connected Wednesday. 

Trump has remained defiant that tariffs are needed arsenic "medicine" to alleviate American commercialized deficits — thing astir economists don't judge is an indicator connected its ain of economical health.

There person been immoderate signs of disquiet expressed by a tiny fig of Republican lawmakers connected Capitol hill, arsenic good arsenic influential Wall Street figures Bill Ackman and Jamie Dimon and Trump's ain billionaire adviser Elon Musk.