Dow jumps 1,300 points amid Trump’s trade war; China warns of countermeasures; Japan negotiates

Some relief is flowing through financial markets worldwide on Tuesday as stocks try to recover some of their historic losses since President Donald Trump dramatically raised the stakes in his trade war last week.

The S&P 500 was up 3.7 per cent in early trading, though it still remains 14 per cent below its record set in February. The Dow Jones Industrial Average was up 1,363 points, or 3.6 per cent, as of 10.12am, and the Nasdaq composite was 4.2 per cent higher.

The bounce was global. Stock indexes rose 6 per cent in Tokyo, 3.4 per cent in Paris and 1.6 per cent in Shanghai. The price of crude oil also pulled a bit higher after touching its lowest level since 2021 on Monday. Bitcoin steadied and was back above US$79,000 after dropping toward US$76,000 the prior day.

No big change is behind the move back upwards, and analysts say more swings up and down are likely for markets in not only the days but also the hours ahead.

The big question remains centred on how long Trump will keep his stiff tariffs on other countries, which would raise prices for US shoppers and slow the economy. If they last a long time, economists and investors expect it to cause a recession. But if Trump lowers them through negotiations relatively quickly, the worst-case scenario can be avoided.

Hope still remains on Wall Street that negotiations may be possible, and Japanese stocks led global markets after the country’s prime minister, Shigeru Ishiba, appointed his trade negotiator for talks with the United States. It was based on an agreement between Ishiba and Trump, Japanese officials said.