European stocks retreated with bonds as the euro climbed toward its highest in two weeks on hawkish comments from a European Central Bank official. Futures pointed to an advance in U.S. equities as trade tensions between the world’s two biggest economies showed signs of abating.
The euro jumped and German 10-year yields touched their highest level this month after a senior European Central Bank official said the first rate hike could come quarters, not years after the end of asset purchases. Treasury yields edged back toward 3 percent and the dollar retreated. Most Asian markets advanced, and Malaysian stocks recovered from an early slide on the first trading day after last week’s unprecedented election result.
Political pressures remain high on the agenda for the week as Italian populists near completion of a government plan, Britain faces a crunch week over Brexit, and the U.S. formally moves its embassy to Jerusalem. In a sign that he may be open to easing trade tensions ahead of a meeting in Washington with Chinese officials this week, President Donald Trump made a major reversal on an earlier move to block telecom equipment maker ZTE Corp. from its U.S. suppliers.
Elsewhere, oil traded below $71 a barrel as the United Arab Emirates said OPEC has enough spare production capacity to mitigate any impact on crude markets if the U.S. re-imposes sanctions on Iran.
Terminal users can read more in our markets live blog.
These are some key events to watch this week:
- China plans to send Vice Premier Liu He to Washington for more trade talks.
- European Union Chief Brexit negotiator Michel Barnier briefs European affairs ministers on the status of talks with the U.K.
- China releases data including industrial production and retail sales figures Tuesday.
- U.K. Prime Minister Theresa May meets with her Brexit cabinet Tuesday to discuss plans for a post-withdrawal customs union.
- U.S. retail sales, industrial production are due this week.
- Vodafone Group, Home Depot, Credit Agricole, Tencent, Cisco Systems, Burberry Group, Walmart, Vivendi, AstraZeneca, Deere, Fujifilm, Noble Group, and Campbell Soup are among the companies releasing earnings this week.
These are the main moves in markets:
- The Stoxx Europe 600 Index fell 0.3 percent as of 8:40 a.m. New York time, the largest fall in more than a week.
- The U.K.’s FTSE 100 Index fell 0.2 percent, the biggest fall in more than a week.
- Germany’s DAX Index fell 0.4 percent to 12,953.91, the largest fall in more than a week.
- The MSCI Emerging Market Index advanced 0.3 percent, reaching the highest in more than three weeks on its sixth straight advance.
- The Bloomberg Dollar Spot Index dipped 0.2 percent to 1,154.96, the lowest in more than a week.
- The euro climbed 0.4 percent to $1.1985, the strongest in more than a week.
- The British pound jumped 0.3 percent to $1.358, the strongest in almost two weeks on the largest climb in four weeks.
- The Swiss franc gained 0.2 percent to $0.9974, the strongest in almost two weeks.
- The yield on two-year Treasuries increased less than one basis point to 2.54 percent, hitting the highest in almost 10 years with its seventh straight advance.
- The yield on 10-year Treasuries gained one basis point to 2.98 percent.
- Britain’s 10-year yield advanced three basis points to 1.471 percent, the highest in more than two weeks.
- Germany’s 10-year yield increased four basis points to 0.60 percent, the highest in almost three weeks on the biggest increase in three weeks.
- Gold increased less than 0.05 percent to $1,318.63 an ounce.
- West Texas Intermediate crude gained 0.2 percent to $70.81 a barrel.
— With assistance by Cormac Mullen, and John Ainger