Stocks, dollar edge higher as investors track US-China trade talk progress

By Lawrence Delevingne and Amanda Cooper

BOSTON/LONDON (Reuters) -Global stocks and the dollar were positive but muted on Tuesday as trade talks between the United States and China continued through a second day, giving investors some reason to believe tensions between the world’s two largest economies may be easing.

U.S. Commerce Secretary Howard Lutnick said discussions between the two sides in London were going “really well” but may run into Wednesday.

Any progress in the negotiations is likely to provide relief to markets given Trump’s often-shifting tariff announcements and swings in Sino-U.S. ties have undermined the two economies, disrupted supply chains and threatened to hobble global growth.

The World Bank on Tuesday slashed its global growth forecast for 2025 by 0.4 percentage points to 2.3%, saying that higher tariffs and heightened uncertainty posed a significant headwind for nearly all economies.

On Wall Street, the Dow Jones Industrial Average rose 0.25%, while the S&P 500 and the Nasdaq Composite both added about 0.6%.

Shares of Wall Street’s most valuable companies were mixed. Tesla TSLA.O added more than 5%, while Microsoft MSFT.O slipped 0.4%. Alphabet rallied 1.4% after Reuters reported that OpenAI plans to add Alphabet’s Google cloud service to meet its growing needs for computing capacity.

World stocks, as reflected by the MSCI All-Country World index, traded near record highs, up 0.4%, while the dollar steadied against a range of currencies.

“While market participants are clearly taking a glass half-full view of the outlook, both on trade policy and more broadly, we don’t think that should be interpreted as a view that tariffs will be fully unwound,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.

Goltermann anticipates U.S. duties on Chinese goods to settle at around 40%, while most analysts have said the universal 10% levy on imports into the United States is here to stay.

In Europe, the STOXX 600 was little changed, constrained by UBS, whose shares dropped nearly 5% as investors worried about the impact of new government proposals to force the Swiss bank to hold $26 billion in extra capital.

In Tokyo, Finance Minister Katsunobu Kato said policymakers were looking at measures to promote domestic ownership of Japanese government bonds, a day after Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates.

Japanese government 30-year yields were virtually flat at 2.92%, having retreated from late May’s record high of 3.18%.