Wall Street aims to reposition itself, returning to where it all began. Just over a month has passed since Donald Trump shook global markets with the start of an unprecedented trade war in the modern world. Today marks the day when markets close a very dark episode for investments that caused significant losses for those who sold at the worst times in early April.
American investors respond with strong buying to the truce announced between the US and China earlier this morning for another 90 days. The Trump Administration has committed to reducing tariffs on Chinese products from 125% to 10%, while Beijing will decrease tariffs on US imports from 145% to 30%. The S&P 500 surges by 2.7%, surpassing 5,800 points, now above pre-'Liberation Day' levels from April 2. This trend extends to the tech-heavy Nasdaq 100, which rises by 4% to over 20,700 points, with the 'fabulous seven' soaring. Amazon rises by 8%, while Apple, Tesla, and Nvidia see gains around 5%. Microsoft struggles with modest 1% gains, while Alphabet gains 3%.
The Eurozone responds to these strong purchases with some of its indices at highs. The German stock market, where the Dax Xetra rises by a slight 0.3% with the US market already open, surpasses the 23,500 points reached last Friday, historical levels for the German index. The Ibex 35, also trading at levels not seen since the financial crisis, sees a 0.6% increase. Among the standout stocks is the airline IAG, which gains over 6% driven by the US-China truce that significantly eases global trade tensions. This is followed by the most cyclical companies in the market, the two steelmakers ArcelorMittal and Acerinox up over 5%, and Repsol with similar gains.
Among the major European markets, the luxury sector stands out, especially benefiting from the cooling of tensions between the two global powers. Major companies in the sector, such as LVMH and Hermès, have seen gains exceeding 7%.
The investor's realignment is also evident in other markets. In the forex market, the euro experiences a significant drop against the dollar. The US currency is trying to regain ground lost in the last month. Today, the euro depreciates by over 1% to trade at levels around 1.11 dollars, returning to previous levels. On April 2, the exchange rate was around 1.09. "This news comes shortly after the UK and US reached a trade agreement last week, which, despite its limited scope, managed to boost risk assets and the dollar," commented analysts from Ebury.
In addition to buying US dollars, investors are also selling gold, a traditional safe haven in times of uncertainty. This Monday, the price of gold falls by nearly 3%, on the verge of dropping below $3,250 per ounce. These levels were seen ten days ago, after reaching over $3,400 just a few sessions ago, hitting historical highs. On the debt side, US bonds continue to be affected by sales, pushing yields up to 4.45%, levels last seen in mid-April.