Global shares rise, dollar softens amid tariff truce
Global shares and Wall Street were higher on an easing in trade tensions between the world’s two largest economies, while the US dollar extended losses as benign US inflation data kept Federal Reserve rate cuts on the table.
Gold prices fell as the US-China trade truce dimmed bullion’s safe-haven appeal.
European stocks eased after four sessions of gains. Asian shares gained. MSCI’s gauge of stocks across the globe rose 2.24 points, or 0.26%, to 873.44.
As a truce in the tariff spat between China and the United States appeared to hit pause in the global trade war, investors have pushed global equities higher, although European shares took a breather on Wednesday.
“It’s all about the change in risk appetite,” said Lars Skovgaard, senior investment strategist at Danske Bank.
“I have a hard time seeing that we’ll go back to this extreme political noise,” he added.
On Wall Street, the Dow Jones Industrial Average rose 64.35 points, or 0.15%, to 42,204.78, the S&P 500 rose 2.26 points, or 0.04%, to 5,888.81 and the Nasdaq Composite rose 72.27 points, or 0.38%, to 19,082.35.
Europe’s STOXX 600 retreated after having jumped over 17% since its trough on April 9, the day US President Donald Trump announced he would be pausing most of the reciprocal tariffs on US trading partners.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 1.56%, to 614.33, while Japan’s Nikkei fell 55.13 points, or 0.14%, to 38,128.13.
The broader Topix snapped a 13-day winning run, its longest streak in nearly 16 years.
Hong Kong’s Hang Seng index jumped, lifted by tech stocks after Chinese e-commerce retailer JD.com posted strong results. Tencent, China’s biggest tech company, posted a 13% rise in first-quarter revenue on Wednesday.
Focus this week will also be on earnings from Alibaba on Thursday.
Data on Tuesday showing softer-than-expected US consumer inflation also provided some relief to investors worried about the inflationary impact of US tariff policies, which had severely undercut expectations of near-term Fed rate cuts.
Though traders expect inflation to pick up as tariffs lift import costs, the uncertainty over the outlook remains as Washington moves ahead to strike deals with its trading partners.
“US tariffs on Chinese goods are still much higher than they were months ago,” said Wei He, China economist at Gavekal Research.
“There’s still plenty of uncertainty about the outlook.” Trump in an interview on Tuesday said he could see himself dealing directly with Chinese President Xi Jinping on details of a trade pact. His touted “potential deals” with India, Japan and South Korea are still pending.
ASSESSING TARIFF IMPACT The Fed has warned of rising economic uncertainty, signalling it is prepared to wait to assess the impact of US tariffs before moving to cut interest rates again. Fed Chair Jerome Powell is scheduled to give remarks on Thursday.
The US dollar, which has taken a beating recently on the back of the economic and policy uncertainty, fell 0.24% against a basket of currencies including the yen and the euro.
Global asset managers held their biggest underweight position in the dollar in 19 years in May, as Trump’s trade policy cut investor appetite for US assets, Bank of America’s global fund manager survey (FMS) showed on Tuesday.
The euro gained 0.25% to $1.1212.
US yields rose as investors weighed softer-than-expected April inflation data against expectations that tariffs will fuel higher prices in the coming months.
Eurozone yields meanwhile retreated.
The next major signal for US economic health is retail sales data for April due on Thursday. The same day, talks are planned between Ukraine and Russia in Istanbul with hopes of a ceasefire three years into the deadliest conflict in Europe since World War Two.
In commodities, rising US crude stockpiles pressured prices. Brent crude futures fell to $66.07 per barrel, down 0.84% on the day. US crude fell 0.91% to $63.09 a barrel Spot gold fell 1.96% to $3,183.69 an ounce.
Canada’s main stock index fell on Wednesday, after six straight sessions of gains, as investors took a breather while awaiting signals from ongoing trade developments.
The Toronto Stock Exchange’s S&P/TSX composite index was down 0.13% at 25,583.02 points after rising 2.6% in the past six sessions and hitting a three-month high last week.
Markets have been rising on trade optimism after a limited US-UK agreement and the United States and China pausing their fierce tariff dispute assuaged fears about a global economic slowdown.
Agencies