Stocks Edge Up as Trade, Economic Momentum Mulled: Markets Wrap




 

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U.S. index futures edged higher with stocks in Europe as investors digested developments in trade talks and comments from a Federal Reserve official about the strength of the biggest economy. Treasuries climbed and a gauge of the dollar held close to the year's high.

The Stoxx Europe 600 Index advanced after fluctuating earlier. Contracts on three main American equity indexes all struggled for traction after the underlying benchmarks rose on Monday, when the U.S. commerce secretary said the nation will delay restrictions on some operations of China's Huawei Technologies. Stocks advanced across Asia except for markets in Hong Kong and Shanghai.

Government bonds climbed in Europe except for Italy's, where leaders may force an early election. The pound slipped after the prime minister announced a proposal to break the deadlock in the Brexit deal with the European Union. Treasuries recovered from Monday declines when Fed Bank of Boston President Eric Rosengren pushed back against further rate cuts. A Bloomberg dollar index steadied, close to its 2019 record.

The latest headlines on global trade and interest rates may provide some reprieve for investors spooked by tumbling bond yields. The U.S. decision on Huawei was seen as encouraging for the long-awaited trade pact between the world's two largest economies. Still, the Chinese company said the temporary relief doesn't change the fact that it's been treated "unjustly."

Meanwhile, Trump's top economic adviser, Larry Kudlow, will speak with business leaders this week amid concerns about the rising odds for a recession, the trade war and whipsawing markets. That comes before Fed Chairman Jerome Powell's remarks about the challenges for monetary policy at the Jackson Hole symposium Friday.

"Our thesis maintains that over the next six months equity markets should do better, really mainly underpinned by the lower interest rates around the world," Jun Bei Liu, a portfolio manager at Tribeca Investment Partners in Sydney, told Bloomberg TV. "Of course, there's a few issues that arise. One is that the valuations seem incredibly high. And the trade conflict is another uncertainty at this point."

Elsewhere, there was muted reaction after China made borrowing costs cheaper for companies with the introduction of a revamped market benchmark rate. Oil futures were steady.

Here are some notable events coming up:

Minutes of the Fed's July meeting will provide details on the discussions leading to the first interest-rate cut in a decade when they are released on Wednesday.Thursday brings the Bank Indonesia rate decision and press conference with Governor Perry Warjiyo.Flash PMIs are due for the euro area on Thursday.Kansas City Federal Reserve Bank hosts its annual central banking symposium in Jackson Hole, Wyoming, starting Thursday. Fed Chairman Jerome Powell will give remarks on Friday.

Here are the main moves in markets:

Stocks

Futures on the S&P 500 Index gained 0.1% as of 6:23 a.m. New York time.The Stoxx Europe 600 Index advanced 0.2%.The MSCI Asia Pacific Index increased 0.6%.Hong Kong's Hang Seng Index fell 0.2%.

Currencies

The Bloomberg Dollar Spot Index dipped 0.1%.The British pound declined 0.2%.The euro advanced less than 0.05% to $1.1081.The Japanese yen strengthened 0.3% to 106.36 per dollar.

Bonds

The yield on 10-year Treasuries decreased four basis points to 1.56%.Britain's 10-year yield declined three basis points to 0.443%.Germany's 10-year yield fell four basis points to -0.69%.Italy's 10-year yield increased five basis points to 1.484%.

Commodities

Gold advanced 0.5% to $1,503.59 an ounce.LME copper decreased 0.7% to $5,733.50 per metric ton.West Texas Intermediate crude gained 0.1% to $56.29 a barrel.

--With assistance from Sybilla Gross and Andreea Papuc.

To contact the reporter on this story: Todd White in Madrid at twhite2@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Laura Curtis

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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