Daily market update: markets bounce back, gold, oil

“After multiple punishing sessions, stock markets appear to have started their road to recovery,” says Russ Mould, Investment Director at AJ Bell.

“Asia led the way, including a 6% advance from the Nikkei after Japan effectively jumped to the front of the queue for tariff negotiations with Donald Trump. Reports that Japan would get priority status for talks fired up markets in hope of a resolution.

“Trump has the same end-goal for the countries on which he has imposed new tariffs. He wants to make it easier for US companies to do business overseas, for the partnering countries to buy more US goods, and for the US to get its hands on strategically important assets such as natural resources.

“The brief flutter of excitement yesterday when rumours circulated that Trump was about to impose a temporary pause on tariffs (excluding China) resulted in a big but brief rally in US markets. While the White House quickly rubbished those rumours, it was enough of a window into what might happen with markets if Trump was more accommodating.

“The Nasdaq ended the day with a very small gain, while the S&P 500 was only down 0.2%. It suggests investors are slowly regaining confidence, perhaps in the belief that an actual breakthrough on tariffs — either a temporary pause or positive negotiations — could unleash the mother of all rebound rallies.

“It’s dangerous to think a massive rally will definitely happen, given how Trump is unpredictable, but the ‘just imagine’ thought will now be firmly engrained in investors’ minds.

“Investors need to take each day as it comes, and Tuesday got off to a good start. The FTSE 100 was up 1.3% first thing. Futures prices imply a 1.1% gain in the Nasdaq and a 1.4% jump in the S&P when US markets open today. Crude oil also increased by 1.2% to $61.45 a barrel, while gold edged 1.8% higher to $3,028 per ounce.

“These are small wins in terms of asset movements but big wins for the state of the broader market given the bloodbath we’ve endured since Liberation Day last week. The stabilising of markets will be welcomed with open arms.

“These price movements should inject some positivity into markets and help investors to stop fretting about dents to their portfolio over the past week. The key challenge is sustaining the upwards momentum.

“Markets could stay fragile for days and weeks to come. It would only take a new sign of aggression from Trump or a trading partner fighting back hard to cause upset again. Market recoveries can quickly lose momentum if investors lose faith in a remedy to the situation that caused the original sell-off.”

These articles are for information purposes only and are not a personal recommendation or advice.