Global Equity Markets Remain Stable; US Dollar Rallies Amid Tariff Relief

Global equity markets soared on Tuesday after US President Donald Trump announced the decision to reduce the impact of auto tariffs.

Ahead of the Wall Street opening, General Motors noted that the ongoing trade tensions will dampen investor sentiments.

The Canadian dollar fell against the greenback as Mark Carney's Liberal party retained power in the country. Market sentiment across the equity markets remained positive after the US vowed to reduce the impact of automobile imports.

“There is a focus on the tariff news getting less worse but there's also a focus on hard data and whether the market is right to worry about a recession,” said State Street Global Markets' head of macro strategy Michael Metcalfe.

The US is set to release first quarter GDP numbers and jobs data this week.

On the European markets front, stocks rallied by 0.25%. HSBC launched a $3 billion share buyback after posting a 25% drop in the profit during the first quarter, while Deutsche Bank reported an increase in net profit by 39%.

Trade overview

Markets fell overnight as the U.S. Treasury Secretary Scott Bessent told CNBC it was “up to China to de-escalate” tariffs. He said that unless there is a permanent solution, the damage will continue to weigh on supply chains.

“A true de-escalation (in the U.S.-China trade war) is some time away, in our view,” Sat Duhra, portfolio manager at Janus Henderson, told the Reuters Global Markets Forum on Tuesday.

“Someone will blink first, and it is likely to be led by the market as we have seen in the U.S.”

How did the dollar react?

The US dollar went up against major currencies, gaining about 0.5% to 142.66 yen. The euro dipped by 0.4% to $1.1377, while sterling fell 0.4% to $1.3386.

The Canadian dollar was trading at 1.3845 per U.S. dollar, down 0.1% after Monday's election.

“A thin parliament lead is hardly positive news for a country’s currency, but Canadian dollar losses have been quite limited in size,” ING analysts said in a note.

Meanwhile, gold fell by 1% to $3,313 an ounce, following the US dollar's rally. Brent Crude came down by 2% to $64.64 a barrel.