(Bloomberg) – US stock futures fell and European equities rallied following a mixed Asian meeting as fears over the recent US-China truce eased. The dollar moved as government bonds rose.
Contracts for all three main US indicators pointed to a small decline. The Stoxx Europe 600 Index has recently rallied, although gains were modest and some national benchmarks were pushed down. In Asia, equities rallied in Hong Kong and the dollar strengthened as the market reopened after a holiday to catch up on Monday despite fierce local protests overnight. Chinese stocks were stable. European bonds rose alongside US notes, and the yield on two-year Italian bonds fell below zero for the first time since the formation of the coalition government in May 2018. Gold recovered after a fall on Monday.
Wall Street started the week with a bang as the S & P 500 Index hit record highs following a new US-China ceasefire. While President Donald Trump said a new round of talks was already underway, his government hours later expanded a list of European products that may be subject to tariffs, underscoring the continuing threat of trade tensions.
"There is definitely a dampening effect that happens throughout the business and corporate world," said Kerry Craig, a global strategist at JPMorgan Asset Management. One or two central bank rate cuts could "stabilize" the ship and increase its risk-weighted assets, although a longer cycle would indicate a significant weakness and prove detrimental.
Elsewhere, oil swung as investors weighed in on the expansion of OPEC production cuts until 2020. The Australian dollar strengthened after the central bank's expected key rate cut, and a further cut may not be justified. Here are some key events:
Boris Johnson and Jeremy Hunt continue their campaign to become the next British Prime Minister. US Markets close on Thursday for Independence Day. The US labor market report is due on Friday and it is expected that the number of non-agricultural workers increased by 164,000 in June (from 75,000 in the previous month).
And here are the main movements in the markets:
futures on the S & P 500 index fell 0.1% from 10.27 pm London time. The Stoxx Europe 600 Index rose 0.2% to its highest level in two months. The British FTSE 100 Index rose 0.5% The MSCI Emerging Market Index fell 0.1%, the largest decline in a week. The MSCI Asia Pacific Index rose 0.3% to its highest level in two months.
The Bloomberg Dollar Spot Index The Euro rose 0.1% to $ 1.2994, the largest increase in more than a week. The British pound fell 0.3% to $ 1.2609, the weakest in two weeks. The Japanese yen climbed 0.2% to $ 108.25 per dollar biggest increase in more than a week.
The yield on 10-year Treasury bills fell two basis points to 2.01%. Germany's 10-year yield fell less than one basis point to -0.36%, the lowest in history. Brits 10-year yield fell by five basis points to 0.766%, the lowest in nearly three years, the largest decline in more than a week.
West Texas Intermediate crude fell 0.3% to $ 58.92 a barrel. Gold gained 0.6% to $ 1,392.73 per ounce, the largest increase in more than a week.
– – With support from Paul Allen and Cormac Mullen.
Contacting the reporter on this story: Laura Curtis in London at firstname.lastname@example.org
Contacting the editors responsible for this story: Samuel Potter at spotter33 @ bloomberg. net, Todd White
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