Global markets rallied on Thursday after US President Donald Trump reversed course on his tariff policy, bringing relief to investors and easing volatility across financial sectors. The Volatility Index (VIX), widely referred to as the “fear index,” dropped significantly after hitting its highest level in five years.
The market boost followed Trump’s announcement on Wednesday of a 90-day pause on reciprocal tariffs for all countries except China. The move defused concerns of a broader trade war, calming investor nerves after several days of sharp declines.
“I have authorized a 90-day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump posted on Truth Social. However, he confirmed that the tariff rate on China would rise to 125%, citing ongoing trade tensions with Beijing.
Trump also remarked that China was willing to strike a deal but uncertain about the timeline following Washington’s increased tariffs. “China wants to make a deal. They just don’t know how quick to go about it,” he said.
Markets responded positively. The VIX fell to around 36.3 early Thursday after spiking to 50 the previous day — a level not seen since the height of the COVID-19 pandemic. US stock markets posted their largest one-day gains in years, reversing losses from four straight sessions.
Gold, often viewed as a safe haven during market stress, also climbed. The price rose to $3,110.12 per ounce, up 0.84% on the day, reflecting both investor caution and increased demand for stable assets.
