Markets Rally as Trump Pauses Tariffs for 90 Days
Sensex and Nifty surged after President Trump paused tariffs for 90 days, sparking optimism in Indian markets despite global tension.
Indian Markets Jump as Trump Freezes Tariffs—But Caution Lingers
In a striking turn of events that sent ripples through global markets, Indian equities surged over 1% on Friday following US President Donald Trump’s decision to pause tariffs for 90 days on all countries except China. This temporary reprieve lifted investor sentiment, even as global uncertainties continued to loom large.
The BSE Sensex climbed an impressive 988 points to open at 74,835.49, while the NSE Nifty 50 followed suit with a 296-point jump, reaching 22,695.40. This rebound came after a market holiday on Thursday in observance of Mahavir Jayanti, giving domestic investors a delayed yet enthusiastic response window.
Relief Rally Boosts Indian Equities Amid Global Volatility
Despite turbulent signals from other Asian markets, India’s benchmark indices surged ahead. The Nikkei 225 plunged over 4%, South Korea’s KOSPI slipped by nearly 1%, and Hong Kong’s Hang Seng posted a marginal decline. Yet, Indian stocks bucked the trend—buoyed by optimism that the 90-day pause could de-escalate trade tensions, at least temporarily.
“This is a welcome breather for Indian markets,” noted Devarsh Vakil, Head of Prime Research at HDFC Securities. “With the additional 26% tariff on Indian goods suspended until July 9, investors can recalibrate their strategies without the immediate overhang of US trade penalties.”
US Bond Market Turbulence Forces Trump’s Hand
Trump’s surprise move appears to be more reactionary than strategic. The global bond market, particularly the $47 trillion US fixed income sector, has been under extraordinary strain. In a twist of irony, instead of seeking refuge in US Treasury bonds, investors began offloading them, pushing the 10-year yield to a worrying 4.5%.
Market analysts attribute Trump’s tariff reversal to this unexpected resistance. “Bond vigilantes, not Beijing, compelled this rollback,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “When the dollar weakens and yields spike, even the White House listens.”
Indeed, the dollar index has dropped to 100, reinforcing speculation that investors are shifting away from dollar-denominated assets amidst the ongoing US-China trade confrontation.
Broader Market Sees Gains, But Experts Urge Prudence
The rally extended beyond blue chips. The Nifty Midcap 100 rose 1.77%, while the Smallcap 100 index advanced by 2.27%. Sectoral performance was also robust—Nifty Metal gained nearly 3%, and the IT index saw a healthy 1.75% uptick.
Still, market veterans caution against getting carried away. “There’s no structural support for a sustained rally,” Vijayakumar warned. “The global picture remains messy, and India, though better positioned, isn’t immune.”
He advised investors to lean toward safety, favoring large-cap stocks with stable valuations over speculative plays. “The fundamentals are strong—low inflation, solid GDP growth—but geopolitics can override economic logic in the short term,” he added.
Trade War Still Simmers Beneath the Surface
While this temporary tariff freeze offers breathing room, the broader US-China trade conflict remains unresolved. On Thursday, US markets dropped sharply as China hinted at retaliatory tariffs, and crude prices declined amid fears of slowed global demand.
US tariffs on Chinese goods now stand at a staggering 145%, and if Beijing retaliates, the ripple effects could disrupt global supply chains once again.
According to a recent Bloomberg analysis, escalating tariffs could slash global GDP growth by as much as 0.5% over the next two quarters. For emerging markets like India, maintaining macroeconomic stability and focusing on domestic demand will be key.
Final Thoughts: A Fragile Window of Opportunity
Friday’s stock market surge may offer a brief sense of relief, but it also underscores the fragility of global investor sentiment. While Trump’s 90-day pause gives India temporary insulation, the larger trade dynamics are far from settled.
For now, Indian investors can enjoy the gains but must tread carefully. With global markets walking a tightrope, safety lies in disciplined investing, cautious optimism, and a close eye on international developments.
Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Market investments are subject to risk. Please consult a certified financial advisor before making investment decisions.
source : The Times of India