By Wednesday’s close, the Dow Jones Index (US30) was up 7.87%, its biggest gain since March 2020. The S&P 500 Index (US500) was up 9.52%, posting its most significant jump since 2008. The Nasdaq Technology Index (US100) flew 12.02%, the biggest one-day gain since 2001. The sharp rise in the indices came after President Trump announced that the US would suspend retaliatory tariffs against countries that failed to retaliate for 90 days. This policy change helped defuse the uncertainty that had gripped global markets in recent weeks, restored risk appetite, and relieved investors. In turn, the US President has heightened tensions with China by raising his tariffs to 125% in response to China’s retaliatory measures.

Minutes from the FOMC meeting underscored concerns about tariff-related inflation. Fed policymakers expect inflation to pick up this year due to the impact of tariff increases, although they recognize considerable uncertainty about the magnitude and sustainability of these effects. At the same time, most officials noted the possibility that inflationary pressures from a variety of sources might be more persistent than previously thought. Almost all participants viewed inflation risks as upside risks and employment risks as downside risks.

The Mexican peso strengthened to 20.2 per dollar, amid easing fears of a global recession and a marked improvement in the demand outlook for Mexican exports, especially in the US, its largest trading partner. Mexican inflation rose to 3.80% in March 2025 from 3.77% in the previous month, in line with market expectations and the highest this year, but remained below the upper threshold of the Bank of Mexico’s 4% inflation target.

Equity markets in Europe were mostly down on Wednesday. Germany’s DAX (DE40) fell by 3.00%, France’s CAC 40 (FR40) closed down 3.34%, Spain’s IBEX 35 (ES35) lost 2.22%, and the UK’s FTSE 100 (UK100) closed down 2.92%. Frankfurt’s DAX Index closed 3% lower on Wednesday, the lowest since late November, reflecting negative sentiment in European markets. China’s announcement of 84% tariffs on US goods escalated the trade war with President Donald Trump and added to selling pressure. Investors have already reacted to retaliatory US tariffs, including a 20% levy on EU imports that took effect today, while the EU approved its first countermeasures against US tariffs.

WTI crude futures rose sharply on Wednesday, climbing more than 4% to trade above $62 a barrel, amid easing recession fears and an improving outlook for energy demand. While China remains off suspension, tariffs on its exports have now been raised to 125% in response to its latest round of retaliatory measures — the broader easing of trade tensions has helped restore confidence in commodity markets. The rally was further supported by the latest EIA report, which showed a larger-than-expected decline in gasoline and distillate inventories, which helped offset a modest rise in crude oil inventories.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) fell by 3.93%, China’s FTSE China A50 (CHA50) added 0.29%, Hong Kong’s Hang Seng (HK50) gained 0.68%, and Australia’s ASX 200 (AU200) was negative 1.80%. Asian equity markets soared on Thursday, following a historic rally on Wall Street after President Trump reduced new tariffs on imports from most US trading partners to 10% for 90 days to allow for trade negotiations. This is a significant reduction from previous duties applied to Japan (24%) and South Korea (25%), although China faces a higher rate of 125% amid escalating trade relations with the US.

The offshore yuan depreciated to around 7.36 per dollar, pressured by rising deflationary fears amid escalating trade tensions between the US and China. China’s inflation data for March showed consumer prices declined for the second consecutive month, falling 0.1% year-on-year, down from February’s 0.7% drop and short of expectations. Producer prices also continued to decline, falling 2.5%, down 2.2% from February and beating expectations. These data indicate continued deflationary pressures, raising concerns about China’s economic recovery and strengthening the case for further monetary easing amid increased tariff risks.