Tariff reprieve sees Wall Street surge: After days of huge losses, share prices rocket on the back of Donald Trump cave-in

Wall Street stocks rocketed last night after Donald Trump caved in to pressure to pause huge tariffs for most countries.

The 90-day reprieve sparked a frenzied buying spree that saw US giants such as Apple and Tesla stage a recovery following the brutal sell-off over the past few days.

The US President had faced intense pressure from allies and Wall Street to hold fire on tariffs.

Billionaire investor Bill Ackman, a major Trump supporter, had publicly called for a pause as he warned that the US faced an ‘economic nuclear winter’.

Mr Ackman, chief executive of Pershing Square, said last night: ‘Thank you on behalf of all Americans.’ Jamie Dimon, dubbed the world’s most powerful banker, had cautioned a recession was a ‘likely outcome’ of the tariffs.

The JP Morgan boss had previously pushed for a quick resolution to the crisis.

Mr Trump’s sudden change of heart came after a turbulent day for global markets that saw investor panic ignite a fire sale in the bond market.

And a sell-off in the UK and European stock markets, which had closed by the time the pause was announced, intensified.

London’s FTSE 100 fell 2.92 per cent, reversing Tuesday’s gains of 2.71 per cent, as investors reacted to the escalation of US-China trade tensions.

Germany’s DAX tumbled some 2.96 per cent and France’s CAC 40 plunged 3.34 per cent. 

But once the news of the pause hit Wall Street, the benchmark S&P 500 index jumped more than 9 per cent and the Dow Jones Industrial Average soared nearly 8 per cent. 

The tech-focused Nasdaq Composite rocketed more than 12 per cent as relief swept through the markets.

Shares in United Airlines were turbocharged, rising more than 26 per cent on hopes that a slump in travel demand due to a recession can be avoided.

Tesla’s share price was up some 22.7 per cent, Apple rose more than 15 per cent and Amazon increased nearly 12 per cent, while chipmaker Nvidia rose 18.72 per cent.

The price of oil, which had fallen below $60 on economic slowdown fears, hit $65 a barrel.

However, investor nerves were set to linger amid tariff negotiations and a trade war between Washington and Beijing.

Kathleen Brooks, research director at broker XTB, said: ‘The news on a pause in tariffs is exceptionally good for global risky assets and for global economic prospects. However, it is only kicking the can down the road. 

‘The market needs to see progress made on cutting deals to ensure that tariff levels are lowered and fairness prevails.’

The Bank of England warned earlier that Mr Trump’s trade war left the world more vulnerable to a financial crisis. Officials said severe economic shocks were more likely if steep tariffs were imposed.

The analysis by the financial policy committee, led by Governor Andrew Bailey, said the ‘global risk environment has deteriorated and uncertainty has intensified’ since Mr Trump’s so-called Liberation Day on April 2. In a sign investors were dumping their safest assets and making a dash for cash, US Treasuries – considered a haven during financial turmoil – were hit early on by fresh sell-offs.

The rout was driven by hedge funds selling bonds to raise cash to cover sharp losses from the market meltdown. A sell-off pushes down bond prices and increases yields.

Higher yields on US Treasuries push up mortgage and loan repayment rates for American households. That threat piled pressure on Mr Trump.

There was also speculation that China was dumping US bonds in a targeted attack as the trade war between Beijing and the White House was stepped up.

Heavy selling spread to the UK, where the 30-year British gilt yield hit 5.617 per cent – its highest level since 1998.

In a blow to the Chancellor, leading economist Mohamed El-Erian claimed Rachel Reeves could be forced to raise income tax or VAT as her ability to balance the books was being ‘eroded’ by the sell-off.