World stocks rose on Tuesday and the dollar gained after plunging the previous day as Donald Trump’s return to the White House brought mixed messaging on tariffs and highlighted markets’ twitching about trade policy.
The Canadian dollar and Mexican peso bore the brunt of the market swings on Tuesday and Monday, after Trump said he was mulling imposing 25% tariffs on the neighboring countries as soon as Feb. 1.
Still, some investors were relieved that Trump did not announce a more comprehensive sweep of tariffs at the start of his second presidency, and that supported a pull-back in the 10-year Treasury bond yield .
“Markets are still absorbing the flurry of executive orders released by Trump, but there is still a sense of relief in general,” analysts at TD Securities said in a note.
A jump in the dollar had sent the Mexican peso sliding well over 1% earlier, while the Canadian dollar tumbled to a five-year low of $0.689, although the selloff later moderated somewhat , .
Jan Von Gerich, chief strategist at lender Nordea, said investors should not assume that US tariffs have been averted for good.
“We shouldn’t get too carried away by this, the fact that he didn’t start with tariffs doesn’t mean that they won’t come later,” he said. “For the global equity market, I think it’s all about Trump now.”
European shares were muted after Asia eked out small gains overnight, with investors and governments comforted by the fact that the European Union and China have dodged tariffs for now.