Global Markets React Cautiously to U.S.-China Trade Truce

The global markets exhibited a subdued response on Tuesday following the announcement of a temporary truce between the United States and China, aimed at pausing their ongoing trade war. This agreement, involving a 90-day halt to the escalation of tariffs, initially spurred a rally in stocks, cryptocurrencies, and commodities on Wall Street.

Investors remain cautious, however, as the initial enthusiasm wanes. While European stocks climbed marginally by 0.2% buoyed by favorable corporate earnings, futures on the S&P 500 and Nasdaq fell by 0.4%, indicating a tentativeness towards U.S. investments. Economist Christopher Hodge highlighted that despite the pause, tariffs will still impose a significant burden on U.S. economic growth.

Adjustments in tariff rates have been made, but these modifications are predicted to have a limited impact on broader economic challenges. The changes reportedly reflect a decline in the effective U.S. tariff rate to 13.1%, though still historically high. Meanwhile, market focus has shifted towards upcoming U.S. inflation data as investors recalibrate their expectations for Federal Reserve rate adjustments.

(With inputs from agencies.)