European equities gained ground, with German automakers outperforming, while risk appetite remained solid after the US withdrew from imposing tariffs on Mexico.
The pan-European STOXX 600 rose 0.62% on Tuesday, running for a sixth day of gains in the last seven, with the Frankfurt DAX up 1.2%, as German investors returned from a one-day vacation.
There, BMW, Daimler and VW – considered sensitive to commercial tariffs – gained between 1.8% and 2%, reflecting a gain of 1.9% for the automotive sector.
Investors breathed better this week after the United States and Mexico reached an agreement on Friday to avoid tariffs threatened by US President Donald Trump if steps were not taken to curb the flow of mainly Central American migrants.
This has eased – at least for now – fears that the United States was in a trade war with another of its major trading partners, adding to the dispute with China.
Trump said today that he could impose more duties on Chinese imports if he fails to make progress in talks with President Xi Jingping at a Group of 20 summit in Japan at the end of this month.
Market participants said investors should wait until the G20 summit, scheduled for June 28-29, for clear signs of how the spit would unfold.
Meanwhile, equities are likely to be supported by expectations of a rate cut by the US Federal Reserve. Markets have a price in a cut by July.
"It seems we will have to wait to see at the end of the month to see what the next move will be," said David Madden, an analyst at CMC Markets. "At that moment, if nothing is said, the actions could go higher – the belief that the Fed will suddenly become accommodating is really pushing the markets."
The MSCI global stock index, which tracks shares in 47 countries, has reached 0.24%. The Wall Street futures also saw a higher opening, with the S & P500 mini futures rising 0.26%.
In Asia, the largest MSCI index of Asia-Pacific equities outside Japan gained 0.9 percent, with the Shanghai stock market up 2 percent after China optimized its policy on major investment projects in an attempt to sustain its slowing economy.
The stock exchanges in Australia, South Korea and Japan also gained.
The dollar remained stable above the 2-1 / 2-month low against a basket of currencies, with growing expectations for a cut in the Fed rate moderated by reluctance to close positions before the G20.
The dollar index fell 0.03% to 96,747 after gaining 0.2% on Monday.
"The markets are considering a rate cut of 25 basis points in July," said Peter Schaffrik, head of the European interest rate strategy at RBC Capital Markets, adding that the expectations of a more flexible policy will probably continue.
"When you see the narrative that the market is painting, it is all the fault of the negative implications of trade war and the reduction of global trade," he said. "It's hard to see how any data point will change the whole image."
Amid cautious optimism, a rally in longer-term eurozone government bonds stalled as the resurgence of global risk sentiment triggered a sell-off in the blockade.
Germany's ten-year bond yield, considered a benchmark for public debt, rose by 3 basis points to minus 0.23 percent, while remaining at one point from last week's record lows.
The yields on thirty-year bonds in Germany and France rose by as much as 8 basis points in the early stages of trade.
In commodities, oil prices have risen, supported by stronger financial markets and the expectations that the OPEC producer group and its allies will keep the supply. Brent crude oil futures were USD 62.67 at 0741 GMT, up 0.4%.