- Markets rebound after initial tariff shock, with S&P 500 gaining 11.8% in sterling terms.
- Economic indicators remain mixed as US GDP declines and dollar hits three-year low.
- Analysts caution that volatility may persist despite improving headlines.
Market Recovery Follows Tariff Pause
Global markets have staged a dramatic recovery after President Donald Trump's initial announcement of sweeping tariffs sent stocks tumbling earlier this month. The S&P 500 posted an 11.8% gain (in sterling terms) from its trough following Trump's decision to implement a 90-day pause on tariffs against all nations except China. This rebound appears to have prompted Trump's recent statement urging investors to "go out and buy stocks now."
Economic Crosscurrents
Behind the market rally, economic signals paint a more complex picture. First-quarter US GDP declined as companies front-ran orders ahead of potential tariffs, while the dollar fell to a three-year low after Trump criticized Federal Reserve policy. Bond markets also saw disruption, with yields soaring as prices fell. "You're seeing whipsaw action across asset classes," said one trader who asked not to be named discussing market conditions.
Analyst Caution
Despite the improving market sentiment, financial experts are advising caution. UBS analysts noted in a May 8 research note that "volatility may remain despite improvement in headlines," recommending investors maintain exposure to secular trends like AI while managing timing risks. Several wealth managers contacted for comment suggested phased entry strategies rather than wholesale market positioning.
What Comes Next
All eyes are now on the expiration of the 90-day tariff pause in July 2025, with Trump teasing a "major trade deal" on social media. Market participants are bracing for potential renewed volatility, even as the administration appears keen to maintain positive momentum. "The president's comments reflect confidence," noted one Republican strategist, "but markets may need more than rhetoric to sustain these gains."