Trade Tensions and Global Market Reactions Amid U.S.-China Talks

Global stocks and the dollar saw muted positivity on Tuesday as the United States and China entered a second day of trade negotiations. Investors remain cautiously optimistic that tensions may ease between the two largest economies. U.S. Commerce Secretary Howard Lutnick acknowledged the productive nature of discussions in London, albeit with a possibility of extending talks into Wednesday.

Any agreement in the trade discussions is likely to create market relief, as fluctuating tariffs and strained Sino-U.S. relations have disrupted supply chains and threatened global growth. Notably, the World Bank cut its global growth forecast for 2025 by 0.4 percentage points to 2.3% due to tariff hikes and rising uncertainties. In U.S. markets, the Dow Jones increased by 0.25%, supported by Tesla's 5% leap, while the S&P 500 and Nasdaq rose by 0.6%. Meanwhile, Alphabet shares benefited from OpenAI's integration of Google cloud services, climbing 1.4%.

European stocks remained stable with the STOXX 600 experiencing little fluctuation, hindered by a drop in UBS shares. Japan's Finance Minister nodded towards domestic bond reforms, with Japanese yields steady. Despite these fluctuations, the dollar showed resilience against global currencies. Investors also scrutinized U.S. inflation data, set to influence Federal Reserve decisions, amidst apprehensions over Washington's fiscal policies and their impact on the dollar.

(With inputs from agencies.)