Stocks Decline as Investors Weigh Trade Prospects: Markets Wrap

Here are the main moves in markets:

Stocks

• Futures on the S&P 500 Index dipped 0.3% as of 7:21 a.m. New York time.
• The Stoxx Europe 600 Index fell 0.9%.
• Switzerland’s SMI Index sank 0.9%.
• Hungary’s BUX Index climbed 0.2%.
• The MSCI Emerging Market Index gained 0.6%.

Currencies

• The Bloomberg Dollar Spot Index advanced 0.2%.
• The British pound sank 0.9% to $1.2555.
• The euro decreased 0.1% to $1.1029.
• The Turkish lira weakened 0.9% to 5.9352 per dollar.

Bonds

• Britain’s 10-year yield sank eight basis points to 0.628%.
• Germany’s 10-year yield fell three basis points to -0.47%.
• Spain’s 10-year yield declined three basis points to 0.204%.

Commodities

• West Texas Intermediate crude decreased 2% to $53.58 a barrel.
• Gold climbed 0.5% to $1,496.03 an ounce.
• Iron ore futures declined 2.4% to $86.30 per metric ton in Singapore.
• Carbon-emissions permits fell 2.4% to 23.85 euros per ton.

U.S. equity futures dropped alongside stocks in Europe after China appeared to pour cold water on a partial trade deal touted by Donald Trump, saying it wanted to iron out details before signing it. European bonds gained.

Contracts on the three main equity indexes signaled U.S. stocks may run out of steam after the S&P 500 rose to within 1.8% of a record close Friday. The Stoxx Europe 600 index declined, led by banks and insurers, after Bloomberg reported China wants further talks before sealing the “phase one” agreement announced Friday by the U.S. president. Stocks had climbed earlier from Sydney to Hong Kong, helping sustain a rally in emerging-market assets after the positive conclusion of the latest round of trade talks.

The yuan pared much of its earlier gains offshore. Treasury futures climbed, after a closely watched yield spread turned positive in the previous session for cash bonds, whose market was closed for American and Japanese holidays. A dollar gauge climbed.

 

The limited agreement outlined by China and the U.S. kept prospects alive for a comprehensive trade deal and provided an initial boost to risk assets. But investor skepticism proved well-founded after Bloomberg reported that Beijing still wants to hammer out the fine print, with some sticking points remaining. Worse-than-expected September trade figures in China underscored the growing pressure on both Trump and President Xi Jinping to reach a deal to avert a wider slowdown in the global economy.

“Let’s not get carried away,” said Raoul Leering, head of international trade research at ING Bank NV. “There is a very tough journey ahead for the U.S. and Chinese negotiators to cut a deal that really has substance.”

Focus will soon turn to earnings season that begins with big U.S. banks including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley.

Elsewhere, the pound retreated after rocketing for the past two sessions as European Union negotiators warned that Brexit plans from U.K. Prime Minister Boris Johnson are not yet good enough to be the basis for an agreement. Turkey’s stock market and currency fell as the U.S. and Europe increased threats to impose sanctions over the incursion into Syria. And West Texas crude oil dropped after surging the most in almost a month on Friday.

Here are some key events coming up this week:

• The International Monetary Fund and World Bank host meetings to discuss economic development and finance.
• St. Louis Fed President James Bullard speaks at Bloomberg’s monetary and financial policy conference in London. Riksbank Governor Stefan Ingves also speaks there. Atlanta Fed President Raphael Bostic speaks in Atlanta. San Francisco Fed President Mary Daly gives a speech in Los Angeles.
• Wednesday brings a monetary policy decision in South Korea.
• U.S. retail sales are forecast to increase for a seventh straight month. Sales in the “control group” are also expected to rise. Consumer spending is carrying the weight of U.S. economic growth so the data will be monitored closely for any signs of slowing.
• China releases third-quarter GDP, September industrial production and retail sales data on Friday.