Weak economic data, tariff concerns weigh on stocks globally

NEW YORK (Reuters) – Modest gains in U.S. stocks helped global equity indices edge higher on Tuesday as investors weighed a U.S.-China trade truce against Washington’s threat to impose additional tariffs on European goods.

Global stock indices traded lower for most of the day after data showing factory activity in the euro zone shrank at a faster pace than expected last month and another report showing U.S. manufacturing activity slowed in June.

In addition, the U.S. Trade Representative’s office released a list of additional European products that could be subject to tariffs, on top of products worth $21 billion that were announced in April. These included olives, Italian cheese and Scotch whisky.

Yet gains in dividend-oriented U.S. utilities and real estate stocks helped push the benchmark S&P 500 to a record high ahead of Friday’s U.S. jobs report.

“We’ve got a wait-and-see on the trade deal, a wait-and-see on the Fed, a wait-and-see on earnings and all of that is in front of us by at least two weeks,” said Art Hogan, chief market strategist at National Securities in New York.

“I am not surprised at all to see this market shift into sideways action.”

MSCI’s All Country World Index .MIWD00000PUS, which tracks stocks in 47 countries, rose 0.2%.

On Wall Street, the Dow Jones Industrial Average .DJI rose 69.25 points, or 0.26%, to 26,786.68, the S&P 500 .SPX gained 8.68 points, or 0.29%, to 2,973.01 and the Nasdaq Composite .IXIC added 17.93 points, or 0.22%, to 8,109.09.

The pan-European STOXX 600 index rose 0.3% following modest gains in Asian equities.

Tuesday was the last full trading day before Friday’s monthly U.S. jobs report, a closely watched data point before the U.S. Federal Reserve’s meeting in late July. Market participants still expect the Fed to cut interest rates despite the developments in trade talks.

“While the threat of additional tariffs on EU imports is still an overhang for investors, the market is more likely taking a breather until new macro-economic data comes out,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

Stocks rallied globally on Monday after U.S. President Donald Trump postponed imposing more tariffs on Chinese products and the two countries agreed to continue negotiations.

Investors, meanwhile, continued to move into safety plays despite the modest gains in equity markets.

Benchmark 10-year notes US10YT=RR last rose 17/32 in price to yield 1.9757%, from 2.033% late on Monday.

The dollar index, which tracks the dollar against major rivals .DXY, was 0.1% lower at 96.749.

Oil prices slipped as concerns that the global economy could be slowing outweighed an agreement by producer cartel OPEC on Monday to extend supply cuts until next March.

Brent crude LCOc1 fell 3.8% to $62.57 per barrel. U.S. crude CLc1 fell 4.7% to $56.32 a barrel.