Stocks, dollar nudge higher on US autos tariff relief

World stocks and the US dollar have edged up after President Donald Trump's administration says it plans to reduce the impact of auto tariffs, a further sign of flexibility on a trade policy that has wreaked havoc on markets in April.

Market focus was also turning to the early signs of the impact tariff pain is having from economic data and the latest company earnings.

Canada's dollar dipped on Tuesday against a broadly-firm US currency as Canadian Prime Minister Mark Carney's Liberals retained power in Monday's election, but fell short of the majority government he had wanted to help him negotiate tariffs with Trump.

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

"There is a focus on the tariff news getting less worse but there's also a focus on hard data and whether the market is right to worry about a recession," said State Street Global Markets' head of macro strategy Michael Metcalfe.

First-quarter US GDP and April jobs figures are due out this week.

While the S&P 500 has recovered much of its early April losses after some rollback on Trump's tariffs, it looks set to end the month down around 1.5 per cent in its third straight month of falls.

European stocks opened higher, with plenty of earnings to digest. HSBC launched a $US3 billion share buyback after reporting a 25 per cent fall in first-quarter profit, Deutsche Bank posted a 39 per cent rise in first-quarter profit and sports-car maker Porsche cut its 2025 outlook on weakness in China and US tariffs.

In Asia, Japanese markets were closed for a holiday, while Hong Kong's Hang Seng edged up 0.16 per cent and the mainland blue chip index fell 0.2 per cent. The Shanghai Composite index ended down 0.05 per cent, marking its third consecutive session of decline.

Markets were rattled overnight when US 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.

"A true de-escalation (in the US-China trade war) is some time away, in our view," Sat Duhra, portfolio manager at Janus Henderson, told the Reuters Global Markets Forum on Tuesday.

"Someone will blink first, and it is likely to be led by the market as we have seen in the US."

JP Morgan analysts said the clock was ticking on hard data resilience, highlighting a 42 per cent peak-to-trough slump in China shipments to the US in the past 10 days, which - if sustained - would reverberate through supply chains.

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

The dollar rose against other major currencies, adding 0.25 per cent to 142.38 yen. The euro dipped 0.12 per cent to $US1.1408, while sterling was down about 0.2 per cent to $US1.3417 .

Still, the euro is up five per cent in April, set for its largest monthly rise on the dollar in nearly three years, while the greenback's 6.7 per cent drop on the safe-haven Swiss franc is the largest in a decade.

Canada's dollar traded at around 1.3821 per US dollar , little changed on the day, following Monday's Canadian election.

"A thin parliament lead is hardly positive news for a country's currency, but Canadian dollar losses have been quite limited in size," ING analysts said in a note.

The stronger dollar set gold back 0.6 per cent to $US3,320 an ounce. Brent crude was 1.4 per cent weaker at $US65 a barrel.

Treasury yields edged up in London trade, rising 2.5 basis points to 4.245.