(Bloomberg) — The manic moves that convulsed markets in recent sessions eased on Tuesday as investors looked for dip-buying opportunities while awaiting clarity on how President Donald Trump’s trade policies will play out.
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Shares in Europe rebounded from the worst three-day loss in five years, while US equity-index futures pointed to gains on Wall Street after Monday’s dizzying swings. Treasuries advanced after Monday’s sharp selloff. Oil gained while gold climbed for the first time in four days. The dollar slipped against major peers.
Volatility has surged with $10 trillion wiped off global equities after the US unveiled sweeping tariffs last week. As fears of a global recession and escalating trade war mounted, investors have been left clinging onto any signs of respite, with some, including BlackRock Inc.’s Larry Fink, seeing a long-term buying opportunity. For now though, President Donald Trump has threatened to slap an additional 50% tariffs on China, while dangling the prospects of some negotiations.
“It is, technically, the setup for a ‘Turnaround Tuesday’ today as calmer heads tend to prevail, and dip buyers emerge,” said Michael Brown, a senior research strategist at Pepperstone Group Ltd. “I wouldn’t exactly be betting the house on a durable bounce, though, unless and until we get a decisive policy pivot.”
Treasuries pared some of yesterday’s heavy losses — at one stage longer-dated yields were up the most since March 2020. Investors will look to bond sales Tuesday to see if there’s any sign of a crack in demand with the US set to sell three- and 10-year notes and 30-year bonds.
“Last night’s price action was more about de-risking and taking profit on those trades which are in the money to cover losses on other assets such as equities,” said Damien McColough, Sydney-based head of fixed income research at Westpac Banking Corp.
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Benchmarks in Hong Kong and China advanced as state-linked funds scooped up assets and the central bank promised loans to help stabilize the market.
Japanese shares jumped as Trump assigned two members of his cabinet to kick off bilateral trade talks after a call with Prime Minister Shigeru Ishiba. Japan appeared set to get priority over other US trading partners in talks on tariffs, putting Tokyo at the head of a long queue of nations seeking to roll back the levies.
Trump made a string of comments Monday about his planned duties on worldwide trading partners. Yet the president offered little clarity about what he is seeking in exchange for lowering duty rates — or whether he’s willing to offer relief at all. He rejected a European Union proposal to drop tariffs on all bilateral trade in industrial goods with the US, meaning that his 20% tariff on all EU imports is due to come into force Wednesday.
“The markets have come very far, very fast,” said Michael Kelly, global head of multi asset at PineBridge Investments. “It’s time for them to stabilize and figure out what the next turn of events is: up because the tariffs are coming down or down because the global economy is going down.”
On Tuesday, China slammed the US for threatening to raise tariffs and pledged to retaliate if Washington followed through. Meanwhile, in signs that Beijing is gearing up for prolonged trade tension, its state-backed funds pledged to buy local equities and exchange-traded funds. The central bank said it will provide support to a sovereign fund when it’s necessary, in order to safeguard the stability of capital markets. It also allowed the yuan to weaken through a lower reference rate.
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Traders’ bets on how much the Federal Reserve will lower US interest rates this year have been fluctuating. At least three reductions are now reflected in overnight interest-rate swaps this year, with the first fully priced in for June. Fed Chicago President Austan Goolsbee said there’s a lot of anxiety among business leaders that tariffs could spark widespread supply disruptions and renew inflationary pressures.
An increasing number of prominent finance executives have spoken out about the risks of Trump’s tariff policy, with billionaire Ken Griffin calling it a “huge policy mistake” by the administration.
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 rose 1.1% as of 8:07 a.m. London time
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S&P 500 futures rose 1.4%
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Nasdaq 100 futures rose 1.2%
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Futures on the Dow Jones Industrial Average rose 1.7%
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The MSCI Asia Pacific Index rose 2.4%
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The MSCI Emerging Markets Index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.4%
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The euro rose 0.6% to $1.0974
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The Japanese yen rose 0.5% to 147.13 per dollar
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The offshore yuan was little changed at 7.3467 per dollar
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The British pound rose 0.4% to $1.2779
Cryptocurrencies
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Bitcoin rose 0.4% to $79,263.45
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Ether was little changed at $1,569.99
Bonds
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The yield on 10-year Treasuries declined three basis points to 4.15%
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Germany’s 10-year yield was little changed at 2.61%
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Britain’s 10-year yield advanced one basis point to 4.63%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Aya Wagatsuma, Sujata Rao and Michael Msika.
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