A global equities index fell on Tuesday, with the dollar declining as investors anxiously awaited clarity on U.S. trade policies. The MSCI global index regained some lost ground after German conservative leader Friedrich Merz was elected chancellor by parliament in a second round of voting following his initial defeat earlier in the day.

Germany's DAX regained some lost ground but still fell 0.5% after the vote, while investor attention remained focused on trade tensions between the U.S. and other countries, particularly China, its largest trading partner. Beijing last week stated that it was evaluating an offer from Washington to hold talks over tariffs, with U.S. President Donald Trump saying that his priority is to achieve a fair deal.

However, without any details of deals or agreements, investor patience has begun to wane. "It's gone from pretty much balance between people who are worried and people who think this will work quickly because it's just a negotiation," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey. "When deals are hinted at but not actually announced, the market slips back to a more negative pessimistic tone. It's not just that they're hinted at and not announced; it's that they're hinted at but with no details."

On Wall Street, stocks fell as investors continued to grapple with uncertainty surrounding U.S. trade policies. The Dow Jones Industrial Average fell 143.66 points, or 0.35%, to 41,075.17, while the S&P 500 and Nasdaq Composite also declined.

Meanwhile, Britain and India clinched a long-coveted free trade pact on Tuesday after tariff turmoil sparked by Trump forced the two sides to hasten efforts to increase their trade in whisky, cars, and food. This development has raised concerns that U.S. trading partners may seek alternative trade agreements, potentially further eroding the dollar's value.

The Federal Reserve begins its two-day policy meeting on Tuesday, where investors will be keenly interested in hearing comments from the central bank regarding how it plans to navigate trade uncertainty. "The Fed remains caught between a rock and a hard place," said Christian Scherrmann, DWS chief U.S. economist.

"We think they will opt for a slightly more hawkish tone but more in the direction of an extended pause than a potential hike." The Fed's comments on trade uncertainty are likely to have a significant impact on market sentiment, particularly regarding interest rates and monetary policy.

In fixed income markets, U.S. Treasury yields were mixed in subdued trade before the Federal Open Market Committee starts its two-day policy meeting. Investors also remain interested in getting a read on demand at the benchmark 10-year note auction later in the day.

The yield on benchmark U.S. 10-year notes rose 1.2 basis points to 4.355%, from 4.343% late Monday, while the 30-year bond yield rose 3.5 basis points to 4.8643%. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 4.6 basis points to 3.795%, from 3.841% late Monday.

In currency markets, Trump's erratic trade policies have been driving significant waves of dollar selling since April as investors shift away from U.S. assets, pushing the euro, yen, and Swiss franc higher on Tuesday. The dollar index fell 0.38% to 99.43, while the euro rose 0.27% to $1.1346.

Against the Japanese yen, the dollar weakened 0.6% to 142.84, while the Canadian dollar strengthened 0.35% versus the greenback to C$1.38 per dollar. Sterling also gained ground, rising 0.56% to $1.3366.

In commodities, oil prices rebounded on technical factors and bargain hunting after a decision by OPEC+ to boost output had sent prices tumbling on Monday. U.S. crude rose 4.31% to $59.59 a barrel, while Brent rose 3.97% to $62.62 per barrel.

Gold prices also reached a two-week high, supported by post-holiday buying from China and concerns over potential U.S. tariffs on pharmaceutical imports. Spot gold rose 1.89% to $3,396.70 an ounce, while U.S. gold futures rose 2.49% to $3,393.60 an ounce.

The global equities index fell on Tuesday as investors waited anxiously for clarity on US trade policies. The dollar declined, and oil prices rebounded from Monday's sell-off. The Federal Reserve policy meeting is expected to provide further insight into how the central bank plans to navigate trade uncertainty. As investors continue to grapple with the implications of U.S. trade policies, market sentiment remains uncertain, with potential consequences for stocks, bonds, and commodities.