By Harry Robertson and Koh Gui Qing
NEW YORK/LONDON (Reuters) – World stock markets rose on Tuesday and the dollar rose after plunging the day before, as Donald Trump’s return to the White House sparked mixed messages on tariffs and highlighted market contractions regarding trade policy.
The Canadian dollar and Mexican peso were hit hardest by market swings after Trump said he was considering imposing 25% tariffs on neighboring countries as early as February 1.
Some investors, however, were relieved that Trump did not announce a more comprehensive set of tariffs at the start of his second presidency, which helped push the yield on 10-year Treasury notes lower.
“Markets are still absorbing the wave of executive orders issued by Trump, but there is still a sense of relief overall,” analysts at TD Securities said in a note.
The MSCI index of world stocks climbed 0.7% and U.S. stocks were mostly higher. Adding 0.8%, the Nasdaq rose 0.7% and the Dow Jones jumped 1%.
A rising dollar had sent the Mexican peso down well over 1% earlier, while the Canadian dollar fell to a five-year low of $0.689, although the selling moderated somewhat after that. .
Jan Von Gerich, chief strategist at bank Nordea, said investors should not assume that U.S. tariffs have been avoided for good.
“You can’t get too carried away with this. The fact that it didn’t start with tariffs doesn’t mean they won’t come later,” he said. “For the global stock market, I think everything now depends on Trump.”
European stocks were muted after Asia made slight gains overnight, with investors and governments reassured that the European Union and China have so far avoided tariffs. customs.
The European continental index rose 0.4%, while the MSCI Asia ex-Japan stock index rose 0.3%.
The , which measures the currency against six other currencies, remained stable at 107.95.
It had earlier risen to 108.79, although it failed to recover the 1.2% it lost on Monday in its biggest daily decline since November 2023.
The euro rose 0.14% to $1.04295, after jumping 1.42% a day earlier.
BOND YIELDS FALL AS CHINA…
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