Stocks climb with bonds before Trump-China meeting

Traders work in the S&P 500 options pit at Cboe Global Markets in Chicago, Illinois. (Bloomberg pic)

NEW YORK: US equity futures extended gains on Friday alongside stocks in Europe as investors awaited results from top-level trade talks between America and China. Oil rose, while Treasuries posted a modest advance.

Futures on the Dow, S&P 500 and Nasdaq Composite indexes all climbed, even as Kraft Heinz plunged in pre-market trading after announcing a US$15.4 billion write-down late Thursday. Mining and technology shares led the advance in the Europe Stoxx 600 Index as Bloomberg’s industrial-metals subindex headed for its highest level since October. Emerging-market stocks increased for a fifth day, the longest streak since May, and a gauge of smaller Chinese stocks entered a bull market. Japanese shares slipped.

The euro erased a gain after data showed that confidence in Germany’s economy, Europe’s largest, fell to a four-year low in February, with traders now awaiting European Central Bank President Mario Draghi’s a speech later Friday. The dollar and gold were flat, while West Texas oil traded above US$57 a barrel in New York.

Markets are cautiously optimistic as US President Donald Trump is set to meet with China’s top trade negotiator in Washington Friday, with the two sides facing a Mar 1 deadline to avoid a further escalation in tariffs. Wagers for an accord between the world’s economic superpowers combined with a less-hawkish stance from some of the biggest central banks has sent an MSCI global gauge of stocks surging 15% in less than two months. Still, concerns about global growth persist.

“Central banks will take centre stage in March, and we believe their appetite to continue with tighter monetary policy will be scaled back,” Nedbank Group strategists Mehul Daya and Walter de Wet said in a note. “Once again the global economy and especially financial markets cannot endure tighter monetary policy and would have to rely on policy makers to stimulate economic growth. These are symptoms of a fragile global economy and financial system.”

Elsewhere, the pound fluctuated as the European Union’s chief Brexit negotiator said he won’t rule out a delay to the date Britain leaves the bloc.

And these are the main moves in markets:

Stocks

The Stoxx Europe 600 Index advanced 0.3% as of 7.27am New York time, the highest in more than 19 weeks. Futures on the S&P 500 Index advanced 0.4%, the biggest gain in a week. The MSCI Asia Pacific Index rose 0.2%. The MSCI Emerging Market Index rose 0.4%. The Shanghai Composite Index jumped 1.9% to 2,804.23, the highest in 21 weeks.

Currencies

The Bloomberg Dollar Spot Index rose 0.1%. The euro fell less than 0.05%, the largest drop in more than a week. The British pound declined 0.3% to $1.2998, the biggest drop in more than a week. The Japanese yen depreciated 0.2% to 110.87 per dollar, the weakest in more than a week.

Bonds

The yield on 10-year Treasuries declined one basis point to 2.68%. Germany’s 10-year yield dipped two basis points to 0.11%, the largest dip in two weeks. Britain’s 10-year yield decreased four basis points to 1.161% and the biggest tumble in more than two weeks.

Commodities

The Bloomberg Commodity Index rose 0.4% to 82.08 with its fifth straight advance. LME nickel rose 1.4% to US$13,025 per metric ton. West Texas Intermediate crude advanced 0.8% to $57.42 a barrel, the highest in more than three months.