Trump says now is a ‘great time to buy’. Is he right?

For the first time in a while, today was a good day to check your share portfolio. On Wednesday night, US markets recorded their third-biggest single-day gain in history, behind only rallies seen at the tail end of the global financial crisis.

The benchmark S&P 500 surged 9.5 per cent after US President Donald Trump blinked, walking back plans to impose sweeping tariffs on 75 countries.

While a wash of green on market screens may tempt investors to jump in, analysts are warning against irrational exuberance.Credit: Bloomberg

The market reaction was swift and dramatic: gold prices leapt to their biggest single-day gain in five years, and the VIX volatility index – dubbed the “fear index” – recorded the largest one-day drop on record.

The rally came just hours after Trump posted on social media: “This is a great time to buy!!!” But while green screens might tempt investors to jump in, analysts are warning against irrational exuberance.

“We’re only back to where we were last week,” Henry Jennings, analyst at Marcus Today, said.

“The key issues remain unresolved. The world’s two largest economies are still locked in an escalating trade war, there are stiff tariffs on Europe, and earnings season is only a few weeks away.”

‘I don’t think it’s time to be a massive hero and go all in.’

Henry Jennings, analyst at Marcus Today

The market moves of late have mirrored meme stock behaviour, but at an index level, with record swings in both directions. Historically, similar surges have not always led to sustained rallies.

Of the next three largest one-day gains in history, markets fell the following day in every case. In two out of three instances, they were still lower a week later.

The good news is that over the following one-, three- and five-year periods, equities rose substantially. Of course, the classic disclaimer still applies: past performance is not indicative of future returns.

“Never before has the fate of the global economy hinged so precariously on the social media posts of a single man,” Jennings noted.

He likened the current environment to a “kangaroo market” – not bull or bear, but one that jumps violently up and down. “We’re down $100 billion one day, up $100 billion the next,” he said.

Despite the optimism, Jennings isn’t going all in.

“We’ve put some money back in the market today, but conservatively. We’ve been buying things like the banks, and we’ll be looking at copper if global growth rebounds.”

According to The Wall Street Journal, Trump caved under pressure from his Treasury Secretary Scott Bessent and Wall Street titans such as JPMorgan chief executive Jamie Dimon, admitting privately that his trade policy risked triggering a recession after bond yields soared.

“Trump seemed willing to tolerate equity market losses,” said Tony Sycamore, analyst at IG. “But his about-face reminds us that the bond market remains the ultimate master of markets.”

Sycamore compared the moment to the UK’s 2022 crisis, when then-prime minister Liz Truss tried to ram through £45 billion in unfunded tax cuts, sending bond yields – and political fallout – soaring.

In a sign of just how volatile sentiment remains, Goldman Sachs reversed its recession call for the US just 73 minutes after initially making it.

Luke Laretive, chief executive of Seneca Financial Solutions, warned against reacting to daily swings, saying: “The best way to destroy your capital is to react to daily moves like this. That’s just gambling.

“You’ve got to have a consistent and repeatable investment process,” he added. “And it’s in times of uncertainty that you lean even harder into your process.”

For now, caution remains the dominant theme.

“I don’t think it’s time to be a massive hero and go all in,” Jennings said. “I think we’ve seen the bottom, but this doesn’t look like a V-shaped recovery. We’re just back to where we were at the Rose Garden.”

As the old saying goes: one swallow doesn’t make a summer.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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