Stocks Slip on Lingering U.S.-China Concern: Markets Wrap

(Bloomberg) — Stocks struggled for traction in Europe while U.S. equity-index futures slipped as concern over trade tensions lingered before America and China sign an initial accord. Treasuries rose and the dollar edged higher.

The Stoxx Europe 600 Index drifted, with gains for health-care shares offsetting drops in carmakers and insurers. Equities across most of Asia fell amid reports that a swath of tariffs on China will stay in place for now. Contracts on the S&P 500 ticked lower. European bonds extended gains after data showed the German economy expanded at the slowest pace in six years in 2019. The pound weakened and gilts climbed after U.K. inflation ebbed to a three-year low, clearing the path for a Bank of England interest-rate cut.

Traders will also keep an eye on earnings due Wednesday from some of America’s biggest banks, including Goldman Sachs Group Inc. and Bank of America Corp. JPMorgan Chase & Co. set the tone yesterday when it posted the best year for any U.S. bank in history, while Citigroup Inc. surpassed its chief’s profitability target.

© Bloomberg S&P 500 members in overbought territory relatively low compared with past rallies

Just hours before the phase-one China deal is signed in Washington, details have emerged that are damping risk appetite. The accord leaves in place tariffs on almost two-thirds of U.S. imports from China until at least November’s presidential election, and would also punish Beijing if it fails to deliver on pledges related to its currency, intellectual property and trade balance. No time was line set for further talks, leaving investors uneasy about future relations between the worlds biggest economies.

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“Despite the landmark signing of the U.S.-Sino trade deal today, markets are unenthused,” said Nema Ramkhelawan-Bhana, an economist at Rand Merchant Bank in Johannesburg. “Phase One, though positive, is merely the start of a long process to undo the damage already inflicted on the global trade order.”

Meanwhile, oil futures drifted, with West Texas Intermediate trading close to $58 a barrel. Gold nudged higher.

Here are some events to watch for this week:

It’s earnings season for the biggest American financial institutions, with Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley and BlackRock Inc. among the next up.The Federal Reserve’s Beige Book report on regional economic conditions is due on Wednesday.China GDP, along with key monthly data for December, come on Friday.A final reading on the euro-zone’s December inflation is also due on Friday.

These are the moves in major markets:

Stocks

The Stoxx Europe 600 Index was little changed at as of 10:18 a.m. London time.Futures on the S&P 500 Index dipped 0.1%.The U.K.’s FTSE 100 Index gained 0.2%.The MSCI World Index was little changed.The MSCI Emerging Market Index fell 0.4%.

Currencies

The Bloomberg Dollar Spot Index climbed 0.1%.The euro was unchanged at $1.1128.The British pound declined 0.2% to $1.2991.The Japanese yen strengthened 0.1% to 109.88 per dollar.

Bonds

The yield on 10-year Treasuries declined two basis points to 1.79%.The yield on two-year Treasuries decreased one basis point to 1.56%.Germany’s 10-year yield declined four basis points to -0.21%.Britain’s 10-year yield decreased seven basis points to 0.646%.Japan’s 10-year yield fell one basis point to 0.01%.

Commodities

West Texas Intermediate crude decreased 0.1% to $58.15 a barrel.Gold strengthened 0.4% to $1,552.68 an ounce.

–With assistance from Adam Haigh.

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Todd White

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