Shares rise, Treasury yields fall, buoyed by easing trade tensions

Global shares saw a rise on Tuesday, driven by indications of easing trade tensions, despite a significant drop in longer-term U.S. Treasury yields. U.S. President Donald Trump decided to delay his threatened tariffs on U.S. imports of European goods until July 9 after a discussion with European Commission President Ursula von der Leyen over the weekend.

Data revealed that U.S. consumer confidence rebounded in May, breaking a five-month decline streak, amidst a temporary truce in the trade dispute between Washington and Beijing. The positive sentiment was reflected in all three major Wall Street indexes, with the S&P 500 and Nasdaq surging over 2% following the Memorial Day holiday. The Dow Jones Industrial Average climbed 1.78% to 42,343.65, the S&P 500 rose 2.05% to 5,921.54, and the Nasdaq Composite increased by 2.47% to 19,199.16.

In Europe, shares also saw a boost, with the defense subindex reaching a record high, and UK shares climbing 0.69% after a holiday earlier in the week. The MSCI’s global stock gauge rose by 1.21% to 880.84.

Investors seemed to be relieved by the news of the tariff deadline extension for EU trade negotiations, interpreting it as a positive sign for the markets. The yield on 30-year U.S. Treasuries dropped by 8 basis points to 4.9572%, marking the largest one-day decrease since mid-April. The 30-year yields, which experienced a significant sell-off in April following Trump’s initial round of tariffs, remained just below 5%, close to their highest levels since October 2023.

The U.S. dollar strengthened against major currencies like the yen, euro, and Swiss franc, following Japan’s decision to reduce bond issuance and the improvement in U.S. consumer confidence. The dollar index, measuring the greenback against a basket of currencies, rose by 0.66% to 99.608.

Gold prices fell as the U.S. dollar gained ground, with spot gold dropping by 1.15% to $3,304.52 an ounce, and U.S. gold futures settling 1.9% lower at $3,300.40. Oil prices also saw a decline due to concerns about a potential oversupply, as Iranian and U.S. delegations made progress in their talks and expectations that OPEC+ would decide to increase output at an upcoming meeting.

Overall, the market sentiment was positive, driven by easing trade tensions and improving consumer confidence. Investors will be closely watching for results from Nvidia, speeches from Federal Reserve policymakers, and the U.S. core PCE price index for further insights on the economic outlook.