LIVE MARKETS-Market watchers mull rally's longevity

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MARKET WATCHERS MULL RALLY'S LONGEVITY

European stocks are surging, tracking Wednesday's Wall Street rally after U.S. President Donald Trump's 90-day tariff pause announcement.

But as of 0928 GMT, U.S. futures are off 2%, and market participants are questioning how long the new-found positive momentum can last.

"How good was the news on effective tariff rates dropping yesterday? If you assume import shares by country stay the same (they won't) it's still pretty bad news thanks to the China tariff at 125%," wrote Jordan Rochester, head of FICC Strategy EMEA at Mizuho Bank in a morning note.

Looking to the next 90 days, he thinks trading risk will be about liquidity additions and trade negotiations with the UK, Japan, Vietnam, Korea and others in focus.

"We’ve rallied hard – who will be the net buyer here?," he asks.

Andrew Craig, co-head of the investment insights centre at BNP Paribas Asset Management said severe negative economic consequences are still expected globally, most notably for the U.S. itself.

"We would expect the negative consequences for growth and employment to become apparent by September at the latest," he wrote.

Morgan Stanley economists say the 90-day delay in reciprocal tariffs reduces immediate downside risk, but prolongs uncertainty.

"With the effective tariff rate at 23%, there is a narrow gap between a slow growth outlook and a downturn. The US economy is still living on the edge."

(Lucy Raitano)

EARLIER ON LIVE MARKETS:

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