By Sinéad Carew and Samuel Indyk
NEW YORK/LONDON (Reuters) -MSCI’S global equities gauge fell on Tuesday, while the dollar declined as investors grew frustrated with the lack of U.S. trade deals and awaited a Federal Reserve update, while oil futures rebounded from Monday’s sell-off.
U.S. Treasury yields rose early, then reversed course to hit their lowest level for the session in afternoon trading following a well-subscribed 10-year notes auction.
In currencies, the dollar lost ground against multiple currencies while euro rose after German conservative leader Friedrich Merz was elected chancellor by parliament in a second voting round, hours after a shock defeat.
Investors focused broadly on trade tensions between the U.S. and the rest of the world, particularly with China, the world’s second biggest economy.
Last week, Beijing said it was evaluating an offer from Washington to hold talks. But U.S. Treasury Secretary Scott Bessent said on Tuesday that while President Donald Trump’s administration was negotiating with 17 major trading partners, it had not yet engaged with China.
Bessent said the U.S. could announce trade deals as early as this week, but did not say with which countries.
“It’s gone from pretty much balance between people who are worried and people who think this will work quickly because it’s just a negotiation. It tips every few days a little bit more negative,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
“When deals are hinted at but not actually announced … the market slips back to a more negative pessimistic tone. It’s not just that they’re hinted at and not announced. It’s that they’re hinted at, but with no details.”
Britain and India clinched a long-coveted free trade pact after U.S. tariff turmoil forced them to hasten efforts to increase their trade in whisky, cars and food.
On Wall Street, at 2:48 p.m. the Dow Jones Industrial Average fell 299.33 points, or 0.73%, to 40,919.50, the S&P 500 fell 28.31 points, or 0.50%, to 5,622.07 and the Nasdaq Composite fell 107.89 points, or 0.60%, to 17,736.35.
MSCI’s gauge of stocks across the globe fell 2.13 points, or 0.25%, to 844.08. Earlier, the pan-European STOXX 600 index closed down 0.18%. Germany’s DAX index ended down 0.4% after falling about 2% earlier.
Investors are waiting for the Fed to make its next policy announcement on Wednesday after the conclusion of a two-day meeting. The central bank is widely expected to keep rates steady but investors will look for signals on future rate cuts.
In fixed income, the yield on benchmark U.S. 10-year notes fell 2.9 basis points to 4.314%, from 4.343% late on Monday while the 30-year bond yield fell 1 basis point to 4.8193%.
The 2-year note yield, which typically moves in step with expectations for Fed interest rate policies, fell 5 basis points to 3.791%, from 3.841% late on Monday.
In currencies, Trump’s trade policies have fuelled significant waves of dollar selling since April.
On Tuesday, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.52% to 99.30.
The euro was up 0.43% at $1.1363 while against the Japanese yen, the dollar weakened 0.86% to 142.48.
Sterling was up 0.58% at $1.3368 after its deal with India. The Canadian dollar strengthened 0.35% versus the greenback to C$1.38 per dollar while against the Swiss franc, the dollar weakened 0.07% to 0.822.
“The market is getting nervous that we’re starting to eat away at the schedule since the 90-day tariff reprieve without anything meaningful being announced,” said Eugene Epstein, head of structuring for North America at Moneycorp, referring to Trump’s April 9 announcement of a 90-day pause on some tariffs to give room for trade negotiations,
In commodities, oil gained more than 3%, rebounding on technical factors and bargain hunting after a decision by OPEC+ to boost output had sent prices tumbling on Monday, although concerns about a market surplus persisted.
U.S. crude settled up 3.43% or $1.96 at $59.09 a barrel while Brent settled at $62.15 per barrel, up 3.19%, or $1.92.
Gold prices rose to a two-week high, supported by post-holiday buying from China and concerns over potential U.S. tariffs on pharmaceutical imports, while investors waited for the Fed policy meeting. [GOL/]
Spot gold rose 2.49% to $3,416.09 an ounce. U.S. gold futures rose 3.1% to $3,414.10 an ounce.
(Reporting by Sinéad Carew, Chibuike Oguh, Gertrude Chavez-Dreyfuss in New York, Sam Indyk in London; Editing by Kate Mayberry, Sharon Singleton, David Evans, Aurora Ellis and David Gregorio)
