Stocks drift, dollar steadies on US auto tariffs relief

The U.S. would move to reduce the impact of duties imposed on foreign parts in domestically manufactured cars, and keep tariffs on cars made abroad from stacking up on other duties, officials said.

European and S&P 500 futures ticked up 0.1%, although moves were limited without meaningful relief on significant China levies.

A public holiday in Japan thinned currency trade in the Asia session, but the U.S. dollar was broadly higher, including against the Canadian dollar, which dipped a little. Mark Carney's Liberals retained power in the country's election on Monday, but fell short of the majority government.

Still, while the S&P 500 has recovered much of its early April losses after some rollback on Trump's tariffs, the dollar has managed only to stabilise, without a big rebound.

The euro, at $1.1376 and up 5% in April, is set for its largest monthly rise on the dollar in nearly three years, while the greenback's 6.7% drop on the safe-haven Swiss franc is the largest in a decade.

Markets were knocked overnight when U.S. Treasury Secretary Scott Bessent told CNBC it was "up to China to de-escalate" tariffs and there are growing worries that unless there is a breakthrough, permanent damage will be wrought on supply chains.

China has moved to make some exemptions but has held off on stimulus, betting Washington blinks first.

Hong Kong's Hang Seng was up 0.3% in afternoon trade and the mainland blue chip index fell 0.2%.

First-quarter U.S. GDP and April jobs figures due this week are likely to be supported by front-loaded purchases to beat out the new taxes, J.P. Morgan analysts said in a note, but a drop in China shipments suggests a reckoning may be due soon.

"The clock is ticking on hard data resilience," the analysts said, highlighting a 42% peak-to-trough slump in China shipments to the U.S. in the past 10 days, which - if sustained - would reverberate through supply chains.

"A worrying decoupling of U.S.-China trade ... now looks to be underway, and we expect the damage to build in coming weeks and months."

Besides U.S. data, inflation readings are due in Europe, beginning with Spain and Belgium later on Tuesday, as well as major corporate earnings.

BP, Adidas, Coca-Cola, General Motors and Visa are due to report later on Tuesday while mega-caps Apple, Microsoft, Amazon and Meta Platforms report later in the week.

The stronger dollar set gold back 1% to $3,305 an ounce. Brent crude was 1% weaker at $65.21 a barrel.

Treasuries were untraded in Asia leaving benchmark 10-year yields at 4.206% and futures broadly steady.