Wall Street posted modest gains on Tuesday, with the S&P 500 and the Nasdaq each edging up 0.10%, while the Dow Jones hovered around the flatline. Investor sentiment remained cautious as markets awaited progress in the ongoing trade negotiations between the United States and China, which entered a second day. US Commerce Secretary Howard Lutnick noted that discussions were "going well" and expected to continue throughout the day. The energy sector led market gains by a wide margin, followed by health care and real estate, while financials lagged behind. Performance among megacap stocks was mixed: Nvidia (-0.40%) and Microsoft (-0.30%) traded lower, whereas Apple (+0.30%), Meta (+0.90%), Alphabet (+0.50%) and Tesla (+1.10%) registered gains.

In South Africa, the rand strengthened slightly despite a sharp contraction in domestic manufacturing output. By 14h15 GMT, the rand was trading at 17.69 against the US dollar, approximately 0.20% stronger than Monday’s close. Statistics South Africa reported that manufacturing production fell 6.30% year-on-year in April—the sixth consecutive monthly decline—worse than the 3.90% drop forecast by economists polled by Reuters. Weakness in the sector weighed on overall GDP growth in the first quarter, which expanded by just 0.10%, with agriculture offering the only notable offset. The rand also found support from a softer US dollar and firmer gold prices. Meanwhile, the Johannesburg Stock Exchange’s Top-40 Index climbed 0.60%, and the yield on South Africa’s benchmark 2035 government bond eased 4 basis points to 10.095%.

In the United Kingdom, the FTSE 100 rose 0.40% to close near record highs at 8 870, buoyed by optimism surrounding US-China trade talks and a dovish interpretation of domestic labour data. UK unemployment rose to 4.60%—the highest rate since 2021—alongside the largest number of job losses since the pandemic. Wage growth also undershot expectations. Signs of a cooling labour market bolstered hopes of a Bank of England rate cut, with markets now pricing in a near-certain reduction by September.

Across Europe, the STOXX 50 and STOXX 600 indices finished little changed in a choppy session, as investors remained focused on the trajectory of the US-China trade dialogue. Although no breakthroughs were announced following Monday’s discussions, US officials maintained an optimistic tone regarding the negotiations.

In Asia, Japanese equities extended their winning streak to a third consecutive session. The Nikkei 225 rose 0.40% to close above 38 200, while the broader Topix gained 0.20% to reach 2 791. Investors were cautiously optimistic, awaiting further news from the high-level US-China talks, which resumed in London on Monday and were expected to continue through Tuesday.

Conversely, Chinese markets retreated, with the Shanghai Composite down 0.44% to 3 385 and the Shenzhen Component falling 0.86% to 10 162. Gains from the previous session were reversed as investor sentiment turned more guarded ahead of further developments. Talks in London reportedly centred on rare earth shipments and the potential easing of export restrictions.

In commodities, WTI crude futures climbed to around $65.40 per barrel, marking a two-month high as markets priced in the possibility that easing trade tensions could support global energy demand. Gold prices remained steady around $3 320 per ounce, as traders took a wait-and-see approach amid the ongoing trade discussions.