The Morning Edge: Markets Roar Back as Trump Shifts Trade Strategy

 In a dramatic pivot, President Trump announced a 90-day tariff reprieve for key trading partners Wednesday – while simultaneously turning up the heat on China with even steeper duties. The surprise reversal sent the US stocks soaring, marking a stunning rebound after days of pandemic-level volatility that wiped trillions from global markets and sent bond yields spiralling. Treasury Secretary Scott Bessent framed the move as a calculated negotiating tactic, insisting the whiplash-inducing policy shifts were designed to force trading partners to the bargaining table.

Yet the relief comes with caveats: a 10% blanket tariff remains on most imports, while existing steel/aluminium duties and fentanyl-related tariffs for Canada/Mexico stay intact. The exception? China, which faces even tougher measures despite Trump's claim that Beijing "wants to make a deal." As markets catch their breath, one thing is clear – this temporary truce does little to resolve the fundamental uncertainty surrounding Trump's unorthodox trade war tactics. With officials prioritizing talks with other nations first, traders should brace for more turbulence ahead.

Data
The Energy Information Administration reported a 2.6-million-barrel build in US crude oil inventories for the week ending April 4th, slightly exceeding economist expectations of a 2.2-million-barrel increase. This follows a larger 6.2-million-barrel surge in the prior week. Despite the recent builds, total crude stocks remain 5% below the five-year average at 442.3 million barrels. On the products side, gasoline inventories declined by 1.6 million barrels last week, bringing stocks in line with the five-year seasonal average. The mixed inventory data comes as markets weigh supply fundamentals against shifting demand outlooks.

Markets
Overnight
US stocks indices staged a historic rebound on Wednesday, with the S&P 500 surging 9.5% for its best day since 2008 after the Trump administration announced a 90-day tariff pause for several trading partners. The rally snapped a four-day losing streak as investors cheered the temporary easing of trade tensions, though the reprieve didn't extend to China - tariffs on Chinese imports were instead raised to 125%. Tech giants led the charge, with Nvidia soaring 18.7% and Apple jumping 15.3%, while automakers saw unprecedented gains with the S&P 500 Auto Index rocketing 20.95% in its biggest single-day advance on record.
The broad-based rally saw the Russell 2000 small-cap index leap 8.66% in its strongest performance since March 2020, while even defensive utilities gained 3.91%

US Treasury yields faced sustained pressure on Wednesday even as the White House announced a temporary pause in new tariffs, leaving bond investors nursing losses. While the US Treasury Department saw healthy demand during an afternoon auction of 10-year notes, many funds were compelled to offload holdings in a scramble for liquidity, casting doubt on government debt's traditional role as a haven asset. Yields on benchmark 10-year Treasuries settled 6.8 basis points higher at 4.328%, having earlier surged to 4.515% - their highest level since February 20- after President Trump authorised a 90-day tariff reprieve for most trading partners.

The US dollar staged a broad recovery on Wednesday, clawing back early losses after President Trump's dual trade policy announcements. The greenback gained particular strength against traditional haven currencies, rising 1.2% to 148.80 yen and advancing 1.14% to 0.8569 Swiss francs as risk appetite returned to markets. The dollar index, which had been under pressure earlier in the session, ultimately turned positive with a 0.11% gain to 102.88, reflecting the currency's shifting fortunes amid the evolving trade landscape. 

Brent crude oil prices surged Wednesday as markets reacted to two key developments: President Trump's 90-day tariff pause for several trading partners and a new executive order designed to streamline energy regulations. Brent crude jumped $2.66, or 4.23%, to close at $65.48 a barrel, while U.S. West Texas Intermediate crude climbed $2.77, or 4.65%, to settle at $62.35. The rally reflected both optimism about global demand following the temporary trade de-escalation and expectations that reduced regulatory burdens could boost domestic energy production. However, traders remain cautious as heightened tariffs on Chinese imports continue to cloud the demand outlook.

Day’s Ledger
Economic Data:

• China March CPI data
• China March PPI data
• US March CPI data
• US weekly jobless claims data

Corporate Actions:

• Anand Rathi Wealth to consider earnings and dividend
• Tata Consultancy Services to consider earnings and dividend

Policy:

• FOMC Member Bowman Speaks  
• FOMC Member Harker Speaks  

Tickers

• Aurobindo Pharma’s Biosimilar Denosumab BP16 Meets primary endpoints in Phase-1 study
• BHEL partners Nuovo Pignone for compressor revamp projects in fertiliser sector
• Coromandel signs MoU with Ma’aden for long-term fertiliser supply
• Infosys extends partnership with AIB to support tech transformation
• LT Foods unit receives ₹2.65 bln from Oriental Insurance as per SC order
• Govt Sells 3.61% Stake in Mazagon Dock via Offer for Sale
• NBCC nets ₹15 billion from Aspire Dream Valley home sales
• Olectra Greentech wins ₹4.2 billion order from Himachal transport body
• RITES Signs MoU with DP World to Explore Logistics, Infrastructure Projects
• Supreme Court Upholds Tribunal Order Favouring RIL in Naphtha Duty Case
• Tata Steel Nederland to cut 1,600 jobs as part of IJmuiden reorganisation

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