Markets are betting that big exemptions for smartphones and computer chips will not be the last time US President Donald Trump walks back from punitive tariffs on Chinese imports – plans that would have crunched earnings and threatened to send the world’s largest economy into a recession.

“Trump was always going to overplay his hand,” said Alex Pollak, the chief investment officer at Loftus Peak, a Sydney-headquartered fund that oversees $1.1 billion and was one of the earlier local backers of Nvidia. The exemption on key components used by the big US tech companies was another sign that the US president was “blinking” on his hardline trade policies, Pollak added.