European markets move higher after punishing global sell-off
European equity markets were back in the green on Tuesday after a losing streak hit investor sentiment across the globe.
As of 16:10 CET, the Stoxx 600 gained 3.37%, key regional indexes, including Germany's Dax and France's CAC 40, were up 2.89% and 3.39% respectively. In Italy, the FTSE MIB rose 3.32% while Spain's IBEX 35 climbed 2.94%. In London, the FTSE 100 remained in the green too, up 3.49%.
The rebound follows a punishing trading session on Monday, although investor sentiment remains cautious as the global tariff spat and uncertainty over US President Donald Trump's next move continues to weigh on confidence.
“Investors need to take each day as it comes, and Tuesday got off to a good start," Russ Mould, investment director at AJ Bell, said in an email note sent to Euronews.
“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 said that the price movements should inject some positivity into markets and help investors to stop fretting about dents to their portfolio over the past week.
“Markets could stay fragile for days and weeks to come. It would only take a new sign of aggression from Trump or a trading partner fighting back hard to cause upset again. Market recoveries can quickly lose momentum if investors lose faith in a remedy to the situation that caused the original sell-off,” he added.
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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 early afternoon Tokyo time, the Nikkei 225 was up 5% at 32,691.34.
Hong Kong also recovered some lost ground, but not anything close to the 13.2% dive on Monday that gave the Hang Seng its worst day since 1997, during the Asian financial crisis.
The Hang Seng gained 1.6% to 20,140.78, while the Shanghai Composite index jumped 0.9% to 3,124.77.
South Korea’s Kospi edged 0.1% higher to 2,331.80, while the S&P/ASX 200 climbed 1.7% to 7,471.10.
Markets in New Zealand and Australia also were higher.
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The US stock markets also climbed at the open on Tuesday. The S&P 500 was up 3.4% while the Dow Jones Industrial Average climbed 1,230 points, or 3.3%. The tech-heavy Nasdaq composite was also higher, up 3.6%.
However, analysts suspect the sustainability of the rebound. “I wouldn’t exactly be betting the house on a durable bounce, unless and until we get a decisive policy pivot,” Michael Brown, a senior research strategist at Pepperstone, wrote in a note.
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Meanwhile, Richard Hunter, head of markets at Interactive Investor, echoed Brown with his comments sent in a email note to Euronews, noting that investor skittishness and volatility remain high.
"The moves were relatively benign compared to the experience of recent days, but underneath the bonnet there were wild gyrations, with the Dow Jones index posting its largest ever intraday swing. Early reports apparently emanating from social media suggested that a pause on tariffs was imminent, which sent markets higher, only for this to be followed by a swift rebuttal from the White House which reversed any potential gains. Later comments from the President threatening to escalate tariffs even further against China kept global investors on high alert.
"In addition, some of the weakness seen in the bond and gold havens over the day were attributed to investors needing to raise funds for margin calls to cover their losses elsewhere. This rotation has been seen before and can turn out to be a self-perpetuating cycle and is one which could put further pressure, if it were needed, on markets globally," he said.
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Hunter also highlighted that it was far too early to say whether the reduced market falls represent an inflection point, or whether they are simply a classic “dead cat bounce”.
"The volatility within the US trading session in particular suggest that either is possible, especially since further tariff announcements will follow which could move sentiment in either direction.
"Indeed, many investors have noted – with some exasperation – that unlike previous crises where a confluence of factors came together to cause extreme market weakness, this set of events is largely due to the actions of just one person. To some extent, global indices are at the mercy of the President, and the growing backlash which the US is beginning to experience in terms of retaliatory tariffs and increasingly aggressive rhetoric are not even near the end of the beginning," he said.
Furthermore, the analyst highlighted, despite finishing marginally higher on the day, the Nasdaq remains down by 19.2% so far this year and firmly in bear market territory with a decline of 23% since its relatively recent record high. Meanwhile, the S&P500 and Dow Jones have fallen by 14% and 10.8% respectively in the year to date.
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"Asian markets were broadly higher overnight...the rally seems to be based on hopes that the talks with the US over the coming days will result in some concessions, with the economy largely dependent on exports with the States being a major and important trade partner.
"China also ramped up its own retaliatory rhetoric and is showing little sign of succumbing to the President’s threats. It has promised its own as yet unspecified countermeasures in addition to the tariffs already announced, alongside which there is the possibility of further state stimulus to underpin the domestic economy. In any event, the outcome as it stands will be ugly and the potential for reduced demand has hit commodity prices in general, with the likes of oil already having declined by 13% this year," he added.
