Stocks stabilize amid trade concern; bonds retreat: Markets Wrap

Investors stand at trading terminals in front of electronic stock boards at a securities brokerage in Shanghai, China, on Friday, Oct. 13, 2017. (Bloomberg pic)

LONDON: European shares advanced and US equity futures drifted with Asian stocks as investors hit pause on a selloff triggered by worries over growing threats to global trade. Treasuries edged lower for the first time in four sessions and most European bonds fell.

Miners and utility companies led the gains as the Stoxx Europe 600 Index climbed. In Asia, Japanese shares reversed earlier losses to finish slightly higher, while Chinese equities entered a bear market on concern about the country’s ability to fight a trade war. The dollar fluctuated and the euro slipped. Brent crude rose above $75 per barrel after US Energy Secretary Rick Perry suggested a planned production hike isn’t enough to stop a price spike.

Investors remain on edge as Europe and China dig in against aggressive trade threats from the US, which are increasingly showing up in business — Harley-Davidson Inc. and Jack Daniels-maker Brown-Forman Corp. have become the latest companies to raise the alarm. As they fret over the immediate outlook traders also have doubts about the longer-term path for US rates; the Treasury curve is the flattest in years, stoking fears about the prospect of a new recession.

“It’s taken a long time for the markets to feel like the trade commentary that’s been coming, particularly out of the US, had some meaning and so what we are seeing investors doing is finally taking a look at this and saying something might actually happen,” Sheila Patel, chief executive officer of Goldman Sachs Asset Management’s international division, said in a Bloomberg Television interview. “We’ve turned more cautious as have our investors.”

Emerging-market stocks edged lower. The Turkish lira fell as President Recep Tayyip Erdogan’s election victory on Sunday continued to feed volatility. Industrial metals dropped and gold traded near the weakest in six months.

Terminal users can read more in Bloomberg’s Markets Live blog.

These are key events coming up this week:

German Chancellor Angela Merkel holds private talks with leaders of the other parties in her coalition government on refugee policy and euro-area reforms in Berlin Tuesday. New Zealand and Indonesia monetary policy decisions on Thursday. U.S. personal spending probably increased in May for a third month, economists forecast ahead of Friday’s data. China manufacturing and non-manufacturing PMI are due on Saturday.
Here are the main market moves.

The Stoxx Europe 600 Index gained 0.2% as of 9.02 am London time. Futures on the S&P 500 Index dipped 0.1% to the lowest in almost four weeks. The MSCI All-Country World Index rose less than 0.05%. The MSCI Asia Pacific Index decreased 0.1% to the lowest in eight months. The UK’s FTSE 100 Index jumped 0.3%.

The Bloomberg Dollar Spot Index rose less than 0.05%, the first advance in a week. The euro fell 0.2% to $1.1684, the largest fall in a week. The British pound declined 0.1% to $1.3273, the biggest fall in a week. New Zealand’s dollar fell 0.4% to $0.6878, the largest fall in a week. The South Korean Won jumped 0.2% to 1,114.80 per dollar, the biggest increase in almost three weeks.

The yield on 10-year Treasuries rose one basis point to 2.89%. Germany’s 10-year yield climbed two basis points to 0.35%, the biggest surge in more than two weeks. Britain’s 10-year yield increased two basis points to 1.294%.

Brent crude rose 0.4% to $75.02 a barrel. LME copper decreased 0.4% to $6,726.50 per metric ton, the lowest in almost 12 weeks. Gold sank 0.6% to $1,258.08 an ounce, the weakest in more than six months on the biggest dip in more than a week.