Wednesday , December 11 2019

Stocks fluctuate on US-China trade outlook; bonds advance

Bloomberg

US equities fluctuated near record highs as investors searched for signs of progress
in China’s comments about prospects for a “phase-one” trade deal. Treasuries and most European sovereign bonds rose.
The S&P 500 swung between gains and losses, while European and Asian stocks were mixed after China said that Sino-American trade negotiators “reached consensus” on certain issues in a phone call and agreed to stay in contact on the remaining points. The Stoxx Europe 600 Index struggled for traction, with gains in food and beverage firms offsetting declines in travel stocks.
The dollar held on to five sessions of gains versus its major peers including the pound, which slipped after a poll signaled a narrowing lead for the ruling Conservative Party ahead of the December 12 UK election. Brazil’s real fell to its weakest ever level versus the greenback.
Hopes that a partial trade deal is just around the corner have pushed a global benchmark of stocks to within 1% of an all-time high. A flurry of buyouts has also helped, including those of brokerage Charles Schwab Corp and luxury goods giant LVMH.
Yet while China’s ministry of commerce pointed to trade progress in a statement, Hong Kong remains a source of
tension, with Beijing summoning America’s ambassador to express its opposition to US interference.
“We take any positive pronouncements on a trade deal with healthy skepticism given how long this has dragged out,” Rabobank strategists including Richard McGuire wrote in a note on Tuesday.
“It would seem that any major progress on the trade deal front will be hindered by the ongoing unrest in Hong Kong.”
Investors are continuing to weigh the dispute’s impact on the world’s largest economy. Federal Reserve chairman Jerome Powell struck an upbeat tone during a speech in which he described the outlook for the American expansion as a glass “more than half full.” The next clues were expected to come from consumer confidence numbers on Tuesday as well as earnings from companies including Dell Technologies.
Elsewhere, Bitcoin headed for a tenth day of declines, which would be its longest losing streak on record.
US consumer confidence figures were expected to be released on Tuesday.
Earnings coming on Tuesday include Dell Technologies Inc, HP Inc and Dick’s Sporting Goods Inc.
US consumer spending data is due Wednesday, along with GDP, jobless claims and durable goods.
The US celebrates Thanksgiving on Thursday, when equity and bond markets will be shut. Euro-area inflation for October is due on Friday. The Bank of Korea sets policy on Friday.
Futures on the S&P 500 Index were little changed in New York. The Stoxx Europe 600 Index was little changed. Spain’s IBEX Index dipped 0.1%. The MSCI Asia Pacific Index climbed 0.1%. The MSCI All-Country World Index was little changed.
The Bloomberg Dollar Spot Index was little changed. The British pound decreased 0.2% to $1.2868. The euro was little changed at $1.1017. The Japanese yen was little changed at 108.95 per dollar. Bitcoin sank 0.6% to $7,168.
The yield on 10-year Treasuries dipped one basis point to 1.74%. Germany’s 10-year
yield decreased one basis point to -0.36%. Italy’s 10-year yield gained one basis point to 1.173%. Japan’s 10-year yield fell one basis point to -0.088%.
West Texas Intermediate crude gained 0.2% to $58.14 a barrel. Iron ore decreased 2.1% to $85.40 per metric ton.
Gold climbed 0.1% to $1,457.10 an ounce.

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