US equity futures climbed with stocks in Europe at the start of a week that could be pivotal for the global trade outlook. The dollar strengthened for an eighth day.
Contracts on the S&P 500 reversed earlier declines and the Stoxx Europe 600 Index gained as investors looked ahead to high-level trade talks this week between Chinese Vice Premier Liu He, Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in Beijing.
Equities also rallied in China as exchanges reopened after a holiday. Earnings season continues with the likes of Michelin reporting on Monday, and Nissan and Cisco later this week. Trading in the rest of Asia was mixed. Japan’s securities markets were shut for a holiday, and the yen weakened.
Yields rose on Treasuries and most European sovereign bonds. The pound stayed lower after the UK economy unexpectedly shrank in December.
Trade tensions are ratcheting up as investors evaluate the prospects for a US-China deal before the March 1 deadline for higher tariffs, as warnings mount that the dispute is curbing the global economic expansion and denting corporate profits. Washington is also in focus, with the US government potentially headed for another shutdown as political tensions flare between Congress and the president.
“We still have concerns about global growth and that centers on those US-China negotiations,” Kerry Craig, global market strategist at JPMorgan Asset Management, told Bloomberg TV from Melbourne. “We’re unlikely to see any massive moves this week saying we’re going to get a deal on that.”
Elsewhere, WTI oil futures slipped toward $52 a barrel, while gold headed for its first drop in three sessions. The Swiss franc swooned almost 1 percent at the start of Asia trading on Monday in a mini-recurrence of the “flash crash” that roiled FX markets early last month.
The Stoxx Europe 600 Index gained 0.8 percent as of 8:42 a.m. New York time, while futures on the S&P 500 Index rose 0.4 percent, the biggest advance in a week.
The UK’s FTSE 100 Index gained 0.7 percent. Germany’s DAX Index gained 0.9 percent and the MSCI Emerging Market Index climbed 0.1 percent.
The Bloomberg Dollar Spot Index climbed 0.2 percent, hitting the highest in almost six weeks with its eighth straight advance. The euro fell 0.1 percent to $1.1309, while the British pound dipped 0.4 percent to $1.2898, the weakest in three weeks. The Japanese yen dipped 0.6 percent to 110.36 per dollar, the weakest in more than six weeks.
The yield on 10-year Treasuries rose two basis points to 2.66%, the first advance in a week. Germany’s 10-year yield jumped three basis points to 0.11%, while Britain’s 10-year yield increased three basis points to 1.18%. Italy’s 10-year yield decreased seven basis points to 2.891%, the first retreat in a week and the biggest tumble in more than two weeks.
West Texas Intermediate crude decreased 0.7% to $52.34 a barrel, the lowest in two weeks. Gold sank 0.7% to $1,305.09 an ounce, the weakest in two weeks on the biggest dip in more than three weeks.