The S&P 500 and Nasdaq 100 reached their dot-com era peak in the final week of March 25 years ago. In the bear market that followed, the Nasdaq saw an almost 80% decline in value from its peak.
Today, Trump’s tariff war is creating uncertainty at a time when markets are at all-time highs.
On Monday, global markets rallied after the news about Trump going slow on tariff’s went public. The Wall Street rally on Monday was driven by signs that U.S. trade sanctions may be less severe than feared, including President Trump’s suggestion that some countries could receive exemptions.
On Monday, the Dow climbed 1.42%, the S&P 500 jumped 1.76%, and the Nasdaq surged 2.27%. Ten of the eleven S&P sectors rose, led by consumer discretionary, consumer staples, and energy. Tesla soared 11.9%, Nvidia rose 3.2%, Palantir rose 6.4%, Meta gained 3.8%, and Amazon rose 3.6%.
According to figures released on Monday, US economic activity increased in March, with a notable recovery in the service sector offsetting a fresh drop in manufacturing.
Ahead of the April 2 deadline for his reciprocal tariffs, President Donald Trump’s recent comments have raised hopes that he may adopt a more selective approach to tariffs.
Reports suggested that certain sector-specific tariffs might be excluded from the administration’s planned April 2 rollout, though officials emphasized that no final decisions had been made. The potential policy shift was welcomed by investors after weeks of volatility driven by recession concerns and weak consumer sentiment.
“Specifically, President Trump announced that he would soon unveil new tariffs on automobiles, aluminum, and pharmaceuticals, while also hinting that certain sectors could receive exemptions or face lower-than-expected tariff rates. This development helped ease concerns about the potential negative impact on supply chains and economic growth, particularly for businesses heavily reliant on imported raw materials. However, markets are still awaiting further details to assess the true extent of these policy measures,” says Linh Tran, Market Analyst at XS.com.
However, Tuesday may not be as bullish for traders as yesterday. Hong Kong’s Hang Seng index has fallen nearly 2% as investors consider Trump’s tariff threats. Meanwhile, mainland China’s CSI 300 recovered to trade flat, while South Korea’s Kospi index fell 0.60% in volatile activity.
In Australia, the S&P/ASX 200 closed the day flat at 7,942.50. Treasurer Jim Chalmers is scheduled to present the country’s budget later today. In the last hour, Japan’s benchmark Nikkei 225 gained 0.54%, while the wider Topix index rose 0.30%.
On Tuesday, the US equity futures are in red. As the Trump administration prepares to impose reciprocal tariffs on April 2, Wall Street is concerned about the possibility of higher inflation and slower economic development. The White House plans a targeted approach to reciprocal tariffs, but investors are aware of potential challenges due to Trump’s rapid shift in proposals.
