 "Why did Indian, other Asian and European markets rise today? Will the trend continue?")
Monday witnessed a bloodbath for stock markets all around the world.
US President Donald Trump’s tariffs cratered markets in India, China, Hong Kong, Taiwan, Japan, Italy, Singapore, Sweden and Switzerland among others.
Hong Kong, Japan and China were the worst off, while Russia, Saudi Arabia and Turkey were the least affected.
A sea of red took over amid gloomy sentiments about Trump’s tariffs and worries about a trade war between the US and China.
However, Tuesday witnessed a surprise with markets in Asia and Europe bouncing back.
This comes despite Trump vowing to impose an additional tariff on China and Beijing vowing to fight the US till the end.
But why did this happen? Will the trend continue?
Let’s take a closer look:
India, Asia and Europe
The Sensex and Nifty recovered from yesterday’s dismal performances when they crumpled nearly 3 per cent and 3.24 per cent to 73,137.9 and 22161.1 respectively.
It was the biggest single-day declines since June 2024 with foreign institutional investors getting rid of Indian shares worth $1.05 billion.
However, both indices mounted a major comeback on Tuesday.
The Sensex, which was up over 1,000 points, closed at 74,227.08.
The Nifty 50, meanwhile, gained 374.25 points to finish with at 22,535.85.
All Sensex constituents ended in the green on Tuesday, barring Power Grid.
Major gainers included Titan, Bajaj Finance, State Bank of India, Larsen & Toubro, Axis Bank, Bajaj Finserv, Asian Paints and Zomato.
As per News18, investors in India are looking forward to the RBI’s monetary policy meet on April 9.
Investors think a .25 bps ratings cut could be in the offing.
Some also seem to be viewing the sell off – the Nifty has declines nearly 15 per cent from its all-time high – as a buying opportunity
Mid-cap and small-cap indices are also down 19 per cent and 22 per cent respectively – making their valuations more appealing to investors
This also came in the backdrop of a broader global recovery in Asia with Japan’s benchmark Nikkei 225 leading the way.
The index, which tracks more than 200 of the country’s biggest listed companies, had dropped 9.5 per cent on Monday.
On Tuesday, the Nikkei 225 ended six per cent in the positive.
China's blue-chip CSI 300 Index and the Shanghai Composite Index both declined over 7 per cent on Monday.
Tuesday saw both indices make a comeback of 1.6 per cent – with a little help from Beijing.
China on Tuesday publicly stepped up efforts to stabilise the market with sovereign fund Central Huijin Investment, dubbed the “national team”, saying it had bought China-listed shares via exchange-traded funds.
Huijin said it will continue to increase holdings to “safeguard the smooth operation of the capital market.”
“In extreme market conditions, we believe institutions like Central Huijin still have substantial capacity to further increase holdings to stabilise the market,” UBS China equity strategist Lei Meng said in a note.
The national team is likely to continue its support for the Chinese stock markets at least for the next two weeks ahead of an end-April meeting of China’s key decision making Politburo, when more fiscal measures could be released, according to Shan Guo, partner of advisory firm Hutong Research.
China vowed to “fight to the end” with the US on Tuesday, after Trump threatened to ratchet up tariffs on Chinese imports to more than 100 per cent.
South Korea’s benchmark Kospi, which fell 5.57 percent on Monday, finished .3 per cent in the green on Tuesday.
What is currently happening is “something of a natural market bounce following Monday’s calamities,” Tim Waterer from the KCM Trade brokerage told the BBC.
“US futures markets have been moving higher, which has given a hint of optimism for Asian markets,” Waterer added.
Australia’s benchmark ASX 200, which cratered 6.2 per cent on Monday, closed 2.3 per cent up.
Hong Kong’s benchmark Hang Seng Index, which suffered the most precipitous decline on Monday of 13.6 per cent (and its steepest decline since the 1997 Asian financial crisis), closed 1.5 per cent higher on Tuesday.
Stocks in Europe, which were incredibly volatile on Monday, also made a comeback on Tuesday.
The pan-European Stoxx 600 index which declined 4.54 per cent on Monday, ended 1.4 per cent higher on Tuesday.
France’s CAC 40, Germany’s DAX and the U.K.’s FTSE 100, which all lost over 4 per cent each on Monday’s trade, finished 1.6 per cent, 1.3 per cent and 1.9 per cent higher on Tuesday.
“Importantly, a little ray of sunshine is starting to emerge that gives hope that the US is genuinely open to trade negotiations, (with) the most significant being Japan with Treasury Secretary Bessent,” said Tapas Strickland, head of market economics at National Australia Bank.
Will the trend continue?
Experts say the best move for investors is to wait and watch.
“The Trump administration is signaling his openness to trade deals,” Elias Haddad, a strategist at Brown Brothers Harriman, told Bloomberg. “Regardless, the pervasive uncertainty created by continuously changing US tariff threats and the scope of potential retaliatory measures remain a major blow to the global economy. Bottom line: relief rallies in risk assets will likely be short-lived.”
“The markets have come very far, very fast,” added Michael Kelly, global head of multi asset at PineBridge Investments. “It’s time for them to stabilise and figure out what the next turn of events is: up because the tariffs are coming down or down because the global economy is going down.”
“This is a very normal action and very technical in nature after a shock period,”Truist’s Keith Lerner, told CNN. “The market is extremely oversold, and markets don’t move in a linear fashion.”
“In a period of uncertainty, each bit of new information is overextrapolated, which leads to wider-than-normal-swings,” Lerner added.
“The mood is a little brighter, at least if you are looking at certain markets such as Japan which might be a priority for trade deal, but there is lots of uncertainty,” said Chris Scicluna, head of economic research at Daiwa Capital Markets in London.
“Markets could continue to be extremely volatile.”
“Yesterday market players saw how the hint of ‘good news’ – in that case it was chatter about a pause in the Liberation Day tariffs – could rally markets by whole percentage points very quickly,” Michael Block of Third Seven Capital said in a note to investors.
“Even though that proved to be all smoke, traders are now poised for the fire – that is, real news.”
Block was referring to a rumour that Trump was considering a 90-day pause for tariffs on all countries barring China.
The report, which the White House called “fake news,” briefly turned US stocks positive early in the Monday’s session.
Others were less optimistic.
“The impulsive nature of the administration means that market participants may still lack much conviction,” said Marc Chandler, chief market strategist at Bannockburn Capital Markets.
Trump over the weekend said he was not concerned about the stock market.
“Sometimes you have to take medicine to fix something,” Trump was quoted as saying over the weekend.
With inputs from agencies
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