After three days of global market turmoil not seen since the early days of the Covid-19 pandemic, stocks regained a measure of calm on Tuesday despite little let up in the escalating trade tensions caused by President Trump’s tariffs.
Before markets opened in China, the government unleashed a series of measures to stabilize stocks. In turn, share prices in Hong Kong, a day after plunging 13.2 percent, and in mainland China jumped about 1.5 percent.
Stocks in Japan gained 6 percent, recouping a portion of the previous days losses. The rise in sentiment followed comments made on Monday by Treasury Secretary Scott Bessent, who said he would soon begin discussions with the Japanese government regarding tariffs.
The Stoxx Europe 600 gained about 1 percent in early trading, with nearly every major market in the region in the green. The pan-European benchmark remains about 15 percent lower than its peak in early March.
Stéphane Boujnah, the chief executive of Euronext, which runs several stock exchanges across Europe, said in an interview on French radio that the disruption caused by tariffs had made the U.S. markets “unrecognizable” to investors, who were shifting some of their money from the United States to Europe.
Markets around the world were unmoored last week by Mr. Trump’s announcement of broad new tariffs — a base tax of 10 percent on American imports, plus significantly higher rates on dozens of other countries. Countries have responded with tariffs of their own on U.S. goods, or with threats of retaliation. China retaliated forcefully on Friday, matching a new 34 percent tariff with one of its own on many American imports.
In the United States on Monday, the S&P 500 fell 0.2 percent after tumultuous trading that at one point pulled the benchmark into bear market territory, or a drop of 20 percent or more from its recent high. S&P futures, indicating how markets might perform when they reopen for trading on Wednesday in New York, were 1.5 percent higher.
Wall Street executives and analysts are growing increasingly worried that escalating trade tensions could do lasting damage to the global economy.
“The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse,” Jamie Dimon, the chief executive of JPMorgan Chase, wrote in his annual letter to shareholders on Monday. Some bank economists are already forecasting that the economy will slip into recession later this year.
Economic growth worries have been reflected in other markets, notably in the price of oil, which continued to slide on Tuesday. Brent crude, the international benchmark, is trading at around $64 a barrel; it was above $80 a barrel three months ago.
The 10.5 percent drop in the S&P 500 on Thursday and Friday was the worst two-day decline for the index since the onset of the coronavirus pandemic in 2020.
With the new higher-rate tariffs set to go into effect on Wednesday, Mr. Trump has remained unrelenting on his trade stance. On Monday he issued a new ultimatum to China to rescind its retaliatory tariffs on the United States, or face additional tariffs of 50 percent beginning Wednesday.
But China showed on Tuesday that it is not relenting.
Several government departments and government-owned enterprises pledged to “maintain the smooth operation of the capital market.” And the People’s Bank of China, the country’s central bank, vowed to support Central Huijin Investment, the arm of China’s sovereign wealth fund that said it was increasing its holdings of stock funds.
In addition, dozens of companies, many of which were owned by the government, announced that they were buying back some of their shares, a move that typically lifts stock prices.
The moves by what is known as China’s “national team” were reminiscent of efforts Beijing took during a market crisis in 2015.
At the time, the Chinese government’s efforts to shore up stock prices came after its own misjudged steps to boost and then cool prices. This time, Beijing’s intervention appears to chime with a strategy by the Chinese leader, Xi Jinping, of presenting his government as a pillar of steady calm against the global economic turbulence unleashed by Mr. Trump’s tariffs.
It remains to be seen how effective Beijing’s actions will be. The meltdown in Chinese markets a decade ago was driven by a sudden loss of confidence by investors, so propping up stocks helped calm nerves, said Zhiwu Chen, a professor of finance at The University of Hong Kong.
But Mr. Trump’s tariffs could inflict damage on China’s economy. “This time, it is much deeper than just market psychology,” Mr. Chen said.
Christopher Buckley, Amy Chang Chien and River Akira Davis contributed reporting.
