World shares rally on Trump tariff relief, Fed hopes

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LONDON/SHANGHAI/SINGAPORE
World shares rallied on Tuesday to hold near one-month highs, with German carmakers outperforming and Wall Street looking to extend gains after the United States stepped back from imposing tariffs on Mexico. With Frankfurt re-opening after a one-day holiday, German investors returned to shares after a U.S.-Mexico deal on Friday apparently averted tariffs threatened by President Donald Trump. Investors are also heartened by expectations the U.S. Federal Reserve will soon start cutting rates, with markets pricing in a cut by July. Those hopes were re-ignited by Friday’s disappointing jobs report, and could be boosted further if retail and inflation data this week also disappoint. We are in a situation where bad news is good news,” said Silvia Dall’Angelo, senior economist at Hermes Investment Management, noting the recent dovish signal from Fed Chair Jerome Powell and recent lacklustre U.S. data. “Equity markets are relying on loose monetary policy, but they are also taking Trump at face value so I expect more volatility ahead,” Dall’Angelo said. Frankfurt’s DAX index rose 1.2%. BMW, Daimler and VW – considered sensitive to trade tariffs – all gained 1.8% to 2%, mirroring a 1.9% gain for the auto sector. The pan-European STOXX 600 climbed 0.8%, on course for a sixth day of gains in the last seven. — VoM.

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