Stocks looked set to decline in Tokyo and S&P 500 contracts retreated. US shares had closed higher as President Donald Trump said Mexico wanted to make a deal before later reports no deal had been reached. Trump said talks will resume tomorrow. The peso sank. Earlier, Treasury yields ended the session little changed as a weak private-jobs report came amid solid service-industries figures. The dollar climbed and oil slumped.

Investor sentiment remains fragile as optimism over monetary policy is offset by ongoing concerns over trade. The most recent US tariff threat on Mexico has led several analysts to forecast increased risk of a recession in the world’s largest economy, which could put pressure on the Federal Reserve to cut rates.

“The markets are waiting to hear, oh we’re talking again with China or some further signalling from the Fed that they are going to do an inoculation for the growth problem,” Alicia Levine, chief strategist at BNY Mellon Investment Management, told Bloomberg TV in New York. “I see this really as a range-bound market for the next few months.”

Elsewhere, West Texas Intermediate crude entered a bear market and Brent tumbled below US$60 after US petroleum inventories ballooned. The peso fell on the lack of a trade deal and after Mexico’s debt was downgraded by Fitch and its outlook cut to negative by Moody’s.