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Stocks mixed as investors digest latest on trade

Jan 21 2019 11:08
Adam Haigh and Yakob Peterseil, Bloomberg

European stocks and US equity futures dipped Monday while Asian markets posted modest gains as investors assessed a mixed bag of headlines on the economy and trade.

The dollar was steady, while European bonds mostly drifted.

The Stoxx Europe 600 Index headed for the first drop in five days, tracking S&P 500 futures lower on what is a holiday in America.

Shares in Tokyo, Hong Kong and Sydney all climbed on lingering optimism for the next round of US-China trade talks at month-end and as data from Beijing alleviated some concerns of a continued deterioration in the world’s second-largest economy.

Not all was sunny, however; the yen strengthened after Bloomberg reported that the two sides are making little progress on the key issue of intellectual property protection. Treasury markets were closed.

After a strong rally last week on signs of the US and China closing in on a trade truce, investors now face a more complex picture.

Data on Monday confirmed China’s economy expanded at the slowest pace since the global financial crisis, in line with many expectations, but December figures for industrial output and retail sales were buoyant. The reports on intellectual property added to the cloudy picture.

"When it comes to this trade truce, we will see a deal light, but it will really have value in name only," Eleanor Creagh, strategist at Saxo Capital Markets, told Bloomberg TV in Sydney.

"Although we have the trade tensions put on ice with the tariff truce at the moment, that underlying strategic rivalry between the US and China will continue."

Elsewhere, the pound was steady as Theresa May briefed her Cabinet on Sunday evening that there was little prospect of cross-party Brexit talks yielding a workable alternative plan to the one that Parliament overwhelmingly rejected last week.

These are some events investors will be watching out for:

Theresa May will explain her next steps on Brexit later on Monday.

Earnings season is in full swing: Johnson & Johnson, IBM, UBS, United Technologies, Texas Instruments, and Ford are among companies posting results this week.

The World Economic Forum, the annual gathering of global leaders in politics, business and culture, opens in Davos, Switzerland on Tuesday.

There are rate decisions for the Bank of Japan (Wednesday), the Bank of Korea and the European Central Bank (both Thursday).

These are the main moves in markets:

Stocks

The Stoxx Europe 600 Index declined 0.4% as of 08:10 London time, the first retreat in a week.

Futures on the S&P 500 Index dipped 0.3%, the first retreat in a week. The UK’s FTSE 100 Index decreased 0.2%.

Germany’s DAX Index sank 0.4%, the biggest dip in more than two weeks.

The MSCI Emerging Market Index advanced 0.1% to the highest in almost 16 weeks. The MSCI Asia Pacific Index gained 0.3% to the highest in almost seven weeks.

Currencies

The Bloomberg Dollar Spot Index decreased less than 0.05%, the first retreat in a week. The euro jumped 0.2% to $1.1383, the first advance in a week and the biggest increase in more than a week.

The British pound fell less than 0.05% to $1.2868. The Japanese yen increased 0.2% to 109.60 per dollar, the first advance in a week.

Bonds

Germany’s 10-year yield dipped less than one basis point to 0.26%. Britain’s 10-year yield declined two basis points to 1.328%. Italy’s 10-year yield climbed less than one basis point to 2.731%.

Commodities

West Texas Intermediate crude dipped 0.1% to $53.75 a barrel. Gold advanced less than 0.05% to $1 282.41 an ounce.

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