Global shares rose as investors speculated that US President Donald Trump’s tough tariff talk will not translate into the most severe protectionist policies.
The S&P 500 Index turned higher, advancing for a second day, after hedge fund billionaire Ray Dalio called Mr Trump’s threat of a trade war “political show” and House Speaker Paul Ryan urged the president to back down from tariffs on steel and aluminium.
The dollar rose against most peers and US oil benchmark West Texas crude advanced to around $62 (€50) a barrel. The broadest measure of Europe’s equities halted a four-day slide after a major breakthrough on the path to a German government. Italy’s stocks and bonds were the standout losers as anti-establishment political groups surged after the outcome of Sunday’s election.
“The positive story today is the lack of anything bad happening,” said Kevin Caron, a senior portfolio manager at Washington Crossing Advisors.
“The bad news would have been if [Mr Trump] announced more tariffs, or if there was some kind of reciprocal action from another country,” he said.
Markets had picked up where they left off last week, despite tariff concerns and the effect of the Italian election faded, said Chris Beauchamp at IG.
However, the issue of global trade
, after Mr Trump riled markets with his proposed tariffs last week,
could still overshadow markets. “Of all the problems that might bring down markets, a tariff war between the major powers is the one that terrifies investors the most. While it is early days yet, the parallels with the depression are being drawn, raising fears that hitherto strong economic growth may take a hit,” Mr Beauchamp said.
Sterling rose against the euro and the dollar as the UK purchasing managers’ index for its big services sector picked up, he said.
Mr Trump declared he will not retreat from his plan to impose tariffs on steel and aluminum imports after Mr Ryan rejected the plan, saying the US economy could suffer. America will not lower duties on steel and aluminum from Mexico and Canada unless the two countries agree to a revamped Nafta, he said in a tweet.
Asked about the remarks from Mr Ryan’s office, Mr Trump was undeterred. “No, we’re not backing down,” he told reporters at the White House, less than an hour after the speaker’s office aired his concerns.
Mr Ryan spokeswoman AshLee Strong said: “We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan.”
Bloomberg and Irish