ISTANBUL 

The US-China 90-day tariff suspension agreement that was made in Geneva last weekend eased fears in the markets, as the VIX Index, or the fear gauge that measures market volatility, dropped to levels unseen since Washington’s sweeping tariffs were unveiled last month.

The US and China have been in a tariff war, but the two countries held high-level talks in Switzerland to decide on lowering the levies.

The US will reduce its tariffs on Chinese goods from 145% to 30% and China will decrease its tariffs on US goods from 125% to 10%, according to the agreement.

US President Donald Trump said at a news conference that a new chapter was opened with China and that China will suspend and lift all non-monetary barriers.

The VIX, which shows fluctuations in the S&P 500, fell 17% to 18.2, reaching levels of the pre-tariff reciprocity period, or before April 2, the so-called Liberation Day.

The VIX Index tested its highest since March 2020 at 65.73 due to recession concerns led by labor statistics released in August 2024. The index’s highest rate was seen in the global economic crisis in September 2008 at 89.5.

The index climbed to 60.13 in April due to the effects of the tariffs and US negotiations with major trade partners.

Zafer Ergezen, a futures and commodity markets expert, told Anadolu that the US and China eased some of the global uncertainties, which pulled down the VIX Index, and the main reasons for the recent market volatility was concerns about slowing global trade, led by the tariff war, which was reflected in gold prices reaching records week after week.

Ergezen said that the risk perception drastically rose in the uncertain atmosphere, but the recent tariff agreement eased some of the uncertainties.

“As the VIX declined, the US Dollar Index began to rise again and oil prices went up, while the safe-haven gold recorded significant losses with uncertainties waning,” he said.

“We have yet to see the full effect of the expectations to end the war in Ukraine, the easing of the conditions in the Middle East, and falling geopolitical risks but these have, so far, raised the optimism in the markets,” he added.

Ozgur Hatipoglu, an international market strategist, told Anadolu that the options market does not estimate more risks on the index side, namely the S&P 500.

“Some two weeks ago, the markets were in the selling mode when it came to everything related to the US but now, they have switched to the buying mode, and it seems this will go on for a while,” he said.

Hatipoglu stated that there has yet to be a clear sign of a broad rally in market breadth indicators despite the rise in the index.

“But we want to see the spread to the base keep on going for a few more days to confirm the strength of this rally–in any case, we can say the indexes are pointing up,” he added.​​​​​​​