U.S. Futures Gain, Europe Shares Drop; Bonds Slip: Markets Wrap

 

 

 

 

 

U.S. equity futures advanced with Asian shares on Monday while Europe stocks turned lower at the beginning of a busy week likely to be dominated by the start of earnings season and the signing of a partial China trade deal. Bonds, the yen and gold retreated.

Contracts on the S&P 500 signaled a rebound from Friday, when the underlying gauge pulled back from a record high. The Stoxx Europe 600 reversed a modest gain as automakers dropped. The pound led declines among Group-of-10 currencies after another Bank of England official pointed to a potential vote for a U.K. interest-rate cut this month; it extended as data showed the economy unexpectedly shrank.

Germany’s benchmark bund yield headed for its least negative closing level since May. The offshore yuan strengthened past 6.9 per dollar for the first time since July. The dollar rose and Treasuries fell across the curve as the completion of the first trade deal nears; President Donald Trump has said the U.S. and China will sign the accord on Wednesday.

“Even getting to this phase-one agreement, when we weren’t sure we would get here, really shows that there’s political will to de-escalate trade tensions between China and the U.S.,” Lucy Meagher, investment adviser at Evan’s & Partners Pty., told Bloomberg Television. “We expect that to be a positive.”

While geopolitics simmers in the background — Trump tweeted support for protesters in Iran angered at their country’s mistaken downing of a Ukrainian jet — the week looks set to be dominated more by the trade story and corporate outlook. Earnings from some of the biggest U.S. companies are due, amid forecasts they will show the smallest growth in three years.

Elsewhere, equities advanced in all major Asian markets except Japan, where there’s a holiday, and Australia. Oil fluctuated after last week posting its steepest loss since July.

Meanwhile, trading in stocks, bonds and currencies was suspended in the Philippines because the Taal volcano to the south of the capital is belching out ash. Taiwanese president Tsai Ing-wen won a landslide victory over a China-friendly challenger. Emerging-market stocks headed for a third day of gains.

 

 

Here are some events to watch for this week:

• Phase one of the U.S.-China trade deal is set to be signed on Wednesday in Washington.
• The biggest American financial institutions kick off earnings season, including JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley and BlackRock Inc.
• Fed official Eric Rosengren discusses the economic outlook at an event on Monday.
• The U.S. releases inflation data for December on Tuesday.
• The Fed’s so-called beige book is due on Wednesday.
• China GDP comes on Friday.

Stocks

• The Stoxx Europe 600 Index fell 0.3% as of 7:00 a.m. New York time.
• Futures on the S&P 500 Index rose 0.2%.
• The U.K.’s FTSE 100 Index gained 0.2%.
• The MSCI Asia Pacific Index increased 0.3%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%.
• The euro was little changed at $1.1122.
• The British pound fell 0.7% to $1.2968.
• The offshore yuan strengthened 0.3% to 6.8923 per dollar.

Bonds

• The yield on 10-year Treasuries rose two basis points to 1.84%.
• The yield on two-year Treasuries gained one basis point to 1.58%.
• Germany’s 10-year yield climbed two basis points to -0.18%.
• Britain’s 10-year yield dipped three basis points to 0.741%.

Commodities

• West Texas Intermediate crude declined 0.1% to $58.96 a barrel.
• Gold weakened 0.6% to $1,553.08 an ounce.