U.S. Futures, Europe Stocks Fluctuate; Bonds Rise: Markets Wrap

(Bloomberg) — American equity-index futures fluctuated with European stocks on Tuesday as U.S. earnings season kicked off and officials prepared to sign the China trade deal in Washington. The yuan held close to its strongest level since July.

Contracts on Wall Street’s main equity benchmarks swung between losses and gains, with JPMorgan Chase & Co. climbing in the pre-market after profit and trading revenue topped estimates. The Stoxx Europe 600 Index drifted, with European banks paring declines following the JPMorgan results. Earlier in Asia, stocks were slightly higher, though they trimmed gains as data showed China’s trade with the U.S. slumped last year.

The Chinese yuan held most of its surge from Monday, when Washington lifted its designation of the country as a currency cheat. Treasuries nudged up, and the dollar rose versus its biggest peers. The pound flirted with a possible sixth day of declines, which would be the longest losing streak since May.

© Bloomberg Relative performance of U.S. tech stocks versus financials at extreme levels

Investors are catching their breath after a surge in optimism ahead of the signing of the first-phase trade deal between the world’s biggest economies and after Washington’s lifting of the currency-manipulator label from Beijing. The direction of travel from here may hinge on the earnings season, which begins in earnest on Tuesday, though Sino-U.S. trade remains in the picture.

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“The next step is really whether the two countries adhere to the trade agreement and what the details of that trade agreement are,” Laura Foll, portfolio manager at Janus Henderson Investors, told Bloomberg TV. “And following on from that, how phase two of the negotiations go.”

Here are some events to watch for this week:

Phase one of the U.S.-China trade deal is set to be signed on Wednesday in Washington.The biggest American financial institutions kick off earnings season, including Citigroup Inc., Wells Fargo & Co., Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley and BlackRock Inc.The U.S. releases inflation data for December on Tuesday.The Fed’s so-called beige book is due on Wednesday.China GDP comes on Friday.

These are the main moves in markets:

Stocks

Futures on the S&P 500 Index decreased 0.1% as of 7:08 a.m. New York time.The Stoxx Europe 600 Index advanced 0.1%.Nasdaq 100 Index futures dipped 0.2%.The MSCI Asia Pacific Index gained 0.3%.

Currencies

The Bloomberg Dollar Spot Index jumped 0.1%.The British pound was little changed at $1.2991.The euro dipped 0.1% to $1.1125.The Japanese yen was little changed at 109.97 per dollar.

Bonds

The yield on 10-year Treasuries fell one basis point to 1.84%.Germany’s 10-year yield decreased one basis point to -0.17%.Britain’s 10-year yield declined two basis points to 0.732%.Japan’s 10-year yield climbed two basis points to 0.016%.

Commodities

West Texas Intermediate crude climbed 0.7% to $58.46 a barrel.Gold dropped 0.3% to $1,543.33 an ounce.Silver weakened 1.1% to $17.75 per ounce.LME nickel declined 2.5% to $13,740 per metric ton.

–With assistance from April Ma and Cormac Mullen.

To contact the reporter on this story: Todd White in Madrid at twhite2@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Yakob Peterseil

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