By Chris Prentice and Samuel Indyk
NEW YORK/LONDON (Reuters) -Global shares gained and major Wall Street indexes were mixed on Wednesday as trade tensions eased between the world’s two largest economies, and the U.S. dollar steadied after recent losses.
Gold prices sank to a more than one-month low as the U.S.-China trade truce dimmed bullion’s safe-haven appeal.
As the tariff spat between China and the United States appeared to abate, along with the prospects of a global trade war, investors have pushed global equities higher, although European shares took a breather on Wednesday.
"It’s all about the change in risk appetite," said Lars Skovgaard, senior investment strategist at Danske Bank (CSE:DANSKE).
"I have a hard time seeing that we’ll go back to this extreme political noise," he added.
MSCI’s gauge of stocks across the globe rose 2.04 points, or 0.23%, to 873.24.
On Wall Street, the S&P 500 rose 6.03 points, or 0.10%, to 5,892.58 and the Nasdaq Composite rose 136.72 points, or 0.72%, to 19,146.81.
The Dow Jones Industrial Average fell 89.37 points, or 0.21%, to 42,051.06.
Europe’s STOXX 600 index closed 0.24% lower, its first loss in five sessions.
Data on Tuesday showing softer-than-expected U.S. consumer inflation also provided some relief to investors worried about the inflationary impact of U.S. tariff policies, which had severely undercut expectations of near-term Fed rate cuts.
Though traders expect inflation to pick up as tariffs lift import costs, the uncertainty over the outlook remains as Washington moves ahead to strike deals with its trading partners.
"U.S. tariffs on Chinese goods are still much higher than they were months ago," said Wei He, China economist at Gavekal Research.
"There’s still plenty of uncertainty about the outlook."
ASSESSING TARIFF IMPACT
The Fed has warned of rising economic uncertainty, signalling it is prepared to wait to assess the impact of U.S. tariffs before moving to cut interest rates again. Fed Chair Jerome Powell is scheduled to give remarks on Thursday.
In remarks on Wednesday, Fed Vice Chair Philip Jefferson said recent inflation data point to continued progress toward meeting the Federal Reserve’s 2% inflation goal, but the outlook is now uncertain due to the possibility that new import taxes will drive prices higher.
The U.S. dollar, which has taken a beating on the back of the economic and policy uncertainty, extended gains, up 0.14% against a basket of currencies including the yen and the euro.
Global asset managers held their biggest underweight position in the dollar in 19 years in May, as Trump’s trade policy cut investor appetite for U.S. assets, Bank of America’s global fund manager survey (FMS) showed on Tuesday.
The euro was down 0.15% at $1.1167, and the sterling weakened 0.38% to $1.3253.
Yields on U.S. Treasuries were higher as markets awaited new economic data as well as a clearer picture of future government deficits from discussions in the U.S. Congress. [US/]
Euro zone bond yields were steady after nudging up to multi-week highs amid easing trade tensions.
The next major signal for U.S. economic health is retail sales data for April due on Thursday. The same day, talks are planned between Ukraine and Russia in Istanbul with hopes of a ceasefire three years into the deadliest conflict in Europe since World War Two.
In commodities, rising U.S. crude stockpiles pressured prices. Brent crude futures settled 54 cents, or around 0.81%, lower to $66.09 a barrel. U.S. West Texas Intermediate crude slipped 52 cents, or 0.82%, to $63.15.
U.S. gold futures settled 1.8% lower at $3,188.3, and spot gold fell 2.07% to $3,180.07 an ounce.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 1.56%, to 614.33, while Japan’s Nikkei fell 55.13 points, or 0.14%, to 38,128.13.
Hong Kong’s Hang Seng index jumped.