Stocks struggle before trade accord; bonds gain: Markets wrap

  • ASEAN+
  • Wednesday, 15 Jan 2020

NEW YORK (Bloomberg): Stocks struggled for traction in Europe while US equity-index futures slipped as concern over trade tensions lingered before America and China sign an initial trade accord. Treasuries rose and the dollar edged higher.

The Stoxx Europe 600 Index drifted, with gains for healthcare shares offsetting drops in carmakers and insurers. Equities across most of Asia fell amid reports that a swathe of tariffs on China will stay in place for now.

Contracts on the S&P 500 ticked lower. European bonds extended gains after data showed the German economy expanded at the slowest pace in six years in 2019. The pound weakened and gilts climbed after UK inflation ebbed to a three-year low, clearing the path for a Bank of England interest-rate cut.

Traders will also keep an eye on earnings due Wednesday (Jan 15) from some of America’s biggest banks, including Goldman Sachs Group Inc and Bank of America Corp.

JPMorgan Chase & Co set the tone yesterday when it posted the best year for any US bank in history, while Citigroup Inc. surpassed its chief’s profitability target.

Just hours before the phase-one China deal is signed in Washington, details have emerged that are damping risk appetite.

The accord leaves in place tariffs on almost two-thirds of US imports from China until at least November’s presidential election, and would also punish Beijing if it fails to deliver on pledges related to its currency, intellectual property and trade balance.

No time was line set for further talks, leaving investors uneasy about future relations between the world's biggest economies.

"Despite the landmark signing of the US-Sino trade deal today, markets are unenthused, ” said Nema Ramkhelawan-Bhana, an economist at Rand Merchant Bank in Johannesburg.

"Phase One, though positive, is merely the start of a long process to undo the damage already inflicted on the global trade order.”

Meanwhile, oil futures drifted, with West Texas Intermediate trading close to US$58 a barrel. Gold nudged higher. - Bloomberg

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