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U.S. stocks pared early losses to trade mixed as investors awaited fresh clues on the outlook for global trade and monetary policy. Treasuries advanced.
The S&P 500 paused the post-Christmas rally of 18 percent as the next round of trade talks between America and China restart in Washington this week. Walmart (NYSE:WMT) Inc. surged after it announced the best holiday quarter in a decade, countering concerns about retail sales and lifting consumer sectors. European shares retreated after two days of gains, led by banks following disappointing earning from HSBC Holdings (LON:HSBA) and increasingly dovish signals from the region’s central bank.
Automakers were also under pressure as the European Union vowed prompt retaliation if the U.S. imposes tariffs on imported vehicles. The dollar was steady against major currencies, while Treasuries traded around 2.65 percent ahead of a slew of speeches from Federal Reserve presidents and the release of last month’s FOMC meeting minutes Wednesday that should shed more light on the central bank’s turn to a more dovish tone.
“Think back to what we’ve gone through with China, which is still in process, neither side benefits from these tariff wars,” Thomas Digenan, head of U.S. intrinsic value equities at UBS Asset Management, said in an interview on Bloomberg Television. The possible tariff on cars is “just one more bargaining chip and one more ball juggling in the air.”
With earnings season nearing its end, the latest minutes from both the Federal Reserve and European Central Bank due this week and U.S. President Donald Trump weighing an extension of the deadline for a trade deal with China, investors have plenty to ponder right now. Uncertainty over the outlook for global growth hangs over everything, and traders will be hoping for some good news from the world’s two largest economies when talks resume in Washington on Tuesday.
In Asia, Bank of Japan Governor Haruhiko Kuroda told parliament the central bank would consider extra monetary easing if required, helping lift the Topix index and sending the yen lower. Shares in China were little changed as equities in Hong Kong dropped.Elsewhere, the pound advanced as U.K. and European officials work on new legal text for the contentious Irish border backstop. The Australian dollar swung to a loss after the nation’s central bank reaffirmed mounting concerns over consumer spending. Gold traded at the highest since May amid increasing bullishness and West Texas crude advanced to trade at about its highest in almost three months.
Here are some key events coming up:
- The Federal Reserve will on Wednesday publish minutes from its recent meeting, with the European Central Bank following suit on Thursday.
- Bank of Canada Governor Stephen Poloz speaks on Thursday; ECB President Mario Draghi speaks on Friday, the same day Reserve Bank of Australia Governor Philip Lowe gives parliamentary testimony.
- An Indonesian rate decision is due Thursday.
These are the main moves in markets:
Stocks
- The S&P 500 Index fell less than 0.1 percent as of 9:53 a.m. New York time.
- The Stoxx Europe 600 Index dropped 0.3 percent, the biggest decrease in more than a week.
- The MSCI All-Country World Index declined 0.1 percent.
- The MSCI Emerging Market Index dipped 0.3 percent.
Currencies
- The Bloomberg Dollar Spot Index gained 0.1 percent.
- The euro fell 0.1 percent to $1.1295.
- The Japanese yen declined less than 0.05 percent to 110.66 per dollar.
- The British pound rose 0.2 percent to $1.2947, the strongest in more than a week.
- The MSCI Emerging Markets Currency Index was little changed.
Bonds
- The yield on 10-year Treasuries fell two basis points to 2.65 percent, the lowest in more than a week.
- Germany’s 10-year yield declined two basis points to 0.095 percent, the lowest in more than a week.
- Britain’s 10-year yield decreased one basis point to 1.152 percent.
Commodities
- The Bloomberg Commodity Index climbed 0.2 percent to the highest about two weeks.
- West Texas crude was little changed at $55.55 a barrel.
- Gold rose 1 percent to $1,335.20 an ounce, the highest in nine months.
