By Sinéad Carew and Samuel Indyk
NEW YORK/LONDON (Reuters) -A global equities index was lower on Tuesday, while the dollar declined as investors waited impatiently for clarity on U.S. trade policies and oil futures rebounded from Monday’s sell-off.
The MSCI global index regained some lost ground after German conservative leader Friedrich Merz was elected chancellor by parliament there in a second round of voting after a shock defeat in his first attempt earlier in the day.
Germany’s DAX, after falling about 2% earlier, regained some lost ground after the vote but still fell 0.5%.
Investor attention remained more broadly on trade tensions between the U.S. and the rest of the world, and in particular China, its biggest trade partner.
Beijing last week said that it was evaluating an offer from Washington to hold talks over tariffs. U.S. President Donald Trump said on Sunday that Washington is meeting many countries, including China, and that his priority with China is to get a fair deal.
But without any details of deals, investor patience waned.
“It’s gone from pretty much balance between people who are worried and people who think this will work quickly because it’s just a negotiation. It tips every few days a little bit more negative,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
“When deals are hinted at but not actually announced … the market slips back to a more negative pessimistic tone. It’s not just that they’re hinted at and not announced. It’s that they’re hinted at but, with no details.”
Meanwhile, Britain and India clinched a long-coveted free trade pact on Tuesday after tariff turmoil sparked by Trump forced the two sides to hasten efforts to increase their trade in whisky, cars and food.
On Wall Street, at 11:25 a.m. the Dow Jones Industrial Average fell 143.66 points, or 0.35%, to 41,075.17, the S&P 500 fell 17.40 points, or 0.31%, to 5,632.98 and the Nasdaq Composite fell 83.59 points, or 0.47%, to 17,760.40.
MSCI’s gauge of stocks across the globe was down 0.39 points, or 0.16%, to 844.82.
The Federal Reserve begins its two-day policy meeting on Tuesday, where the central bank is widely expected to keep rates steady but investors will be keen to hear the central bank’s comments on how it will navigate trade uncertainty.
“The Fed remains caught between a rock and a hard place,” said Christian Scherrmann, DWS chief U.S. economist. “We think they will opt for a slightly more hawkish tone, but more in the direction of an extended pause than a potential hike.”
