Global share markets rallied sharply on Thursday, with the ASX surging by nearly $100 billion in a single day, after US President Donald Trump announced a 90-day pause on tariffs for more than 75 countries.
The move ignited investor optimism and sent markets into overdrive, but only for a 24-hour period.
The ASX 200 jumped 4.5 per cent – marking one of its strongest single-day gains in five years – while Wall Street’s S&P 500 soared 9.5 per cent, its biggest daily rise since the 2008 financial crisis. The US rally added a staggering US$4.3 trillion in market value.
Investors embraced the temporary reprieve as a potential circuit breaker in escalating trade tensions, but AMP chief economist Shane Oliver cautioned the market rebound may be premature, warning: “We haven’t seen the bottom yet.”
Speaking at Momentum Media’s Election 2025 event on Thursday, Oliver reminded investors that even larger bounces than Thursday’s occurred during the global financial crisis (GFC).
“Big one-day bounces like we saw in the last week are common in share market downturns as investors turn short and have to close positions when there is any good news. There were even bigger one-day bounces in October and November 2008, but shares didn’t bottom in the GFC till March 2009. The key is to watch any re-rest of the lows,” he said.
“I think there’s a lot more volatility to come as we work through this issue of tariffs and eventually pivot to something more positive.”
Oliver cautioned that the correction could extend beyond 15 per cent before stabilising, but stressed that while the situation feels “different”, history has shown similar patterns before.
“It’s always going to happen, markets will have ups and downs, but the broader trend is up,” he said, adding that ultimately he expects a “more durable rebound” to occur.
As such, straying too far from the US could mean missing out on growth down the line, he said, but added that the US will eventually lose some ground in the MSCI World Index, leading to a more balanced global equity exposure over time.
Despite the 90-day pause on tariffs affecting over 75 countries, Oliver explained the average effective tariff rate remains unchanged at some 30 per cent, as the escalation of duties on Chinese imports offsets any easing elsewhere.
“That concerns me immensely,” he said.
“Donald Trump is threatening to blow things up, pouring petrol everywhere. He loves tariffs, doesn’t know how they work, wouldn’t have a clue, but he loves them,” the chief economist said.
“The fact is, Trump’s tariffs have dampened the outlook, whether they stay where they are now or they go back to the higher numbers.”
He warned that the global growth outlook remains fragile.
While fears of a worldwide recession are premature, Oliver believes the US appears increasingly vulnerable to a downturn.
But Australia, by contrast, is expected to skirt recession, he said, with inflation projected to moderate in most regions – excluding the US, where price pressures are expected to persist.
