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Stocks Edge Higher With Focus on China Trade Deal: Markets Wrap

Claire Ballentine and Vildana Hajric

(Bloomberg) -- U.S. stocks edged higher to fresh records as investors looked for signs of progress in U.S.-China trade negotiations. The dollar weakened and Treasury yields dipped.

The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all fluctuated throughout the day, but ended up eking out a gain. Defensive shares such as consumer staples and utilities performed best. Word that the White House would extend a license to allow U.S. companies to do business with Chinese telecom firm Huawei competed with reports that said Beijing was skeptical about reaching a broad deal anytime soon.

U.S. equities are showing their sensitivity to any developments on trade after months of closely followed negotiations. Today’s records extended gains from last week, when White House economic adviser Larry Kudlow said U.S.-China talks were nearing the final stages.

“I don’t know how many times we’ve seen optimism turn into pessimism,” said Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, which manages around $1.7 billion. “If it was easy, it would already be signed.”

Meanwhile, the dollar extended a slide after Federal Reserve Chairman Jerome Powell met with President Donald Trump and Treasury Secretary Steven Mnuchin on Monday to discuss the economy. Japanese and Chinese equities closed higher, while stocks slipped in India and Australia. Hong Kong’s market outperformed even as unrest in the city continued.

Most members of the Stoxx Europe 600 Index fell. The pound jumped as the Conservative Party maintained its poll lead less than a month before U.K. elections.

China’s yuan dipped after the country’s central bank lowered borrowing costs on short-term loans for the first time since 2015 and injected $26 billion into the financial system. The moves were seen as aimed at shoring up confidence following a string of poor data in the second-biggest economy.

On the energy front, Saudi Arabia set an IPO valuation target for Aramco well below the kingdom’s goal of $2 trillion and pared back the size of the sale. It looks set to rely on local investors after most international money managers balked at even the reduced price target.

Here are some key events coming up this week:

U.S. economic indicators due for release include housing starts Tuesday and initial jobless claims on Thursday.Britain holds its first televised leadership debate before next month’s election Tuesday.Federal Reserve speakers this week include district bank presidents John Williams, Loretta Mester and Neel Kashkari.European central bankers speaking this week include European Central Bank President Christine Lagarde, Bundesbank chief Jens Weidmann, along with Yves Mersch, Luis de Guindos, Pablo Hernandez de Cos and Philip Lane.China announces its loan prime rates, a benchmark for borrowing costs, on Wednesday.

These are the main moves in markets:

Stocks

The S&P 500 Index rose less than 0.1% at the close of trading in New York.The Stoxx Europe 600 Index was little changed.Hong Kong’s Hang Seng Index jumped 1.3%.

Currencies

The Bloomberg Dollar Spot Index fell 0.1%.The euro strengthened 0.2% to $1.1075.The Japanese yen rose 0.1% to 108.65 per dollar.The offshore yuan sank 0.3% to 7.0254 per dollar.The British pound gained 0.5% to $1.2955.

Bonds

The yield on 10-year Treasuries dipped two basis points to 1.81%.Britain’s 10-year yield rose two basis points to 0.75%.Germany’s 10-year yield was little changed at -0.34%.Italy’s 10-year yield fell two basis points to 1.21%.

Commodities

West Texas Intermediate crude decreased 1.5% to $56.84 a barrel.Gold rose 0.2% to $1,471.77 an ounce.

--With assistance from Michael Msika, Andreea Papuc and Todd White.

To contact the reporters on this story: Claire Ballentine in New York at cballentine@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, ;Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh

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