Europe Stocks, U.S. Futures Advance; Dollar Rises: Markets Wrap

European stocks climbed with U.S. equity futures Tuesday as investors awaited developments on trade talks between the world’s largest economies. Asian shares were mixed as a rebounding dollar put pressure on emerging markets.


Retailers and real estate companies were among the biggest gainers as the Stoxx Europe 600 Index shrugged off unexpectedly weak German industrial production numbers to edge higher. The euro held losses after the data. Futures on the Dow, Nasdaq and S&P 500 all pointed to gains at the open. In Asia, Japanese shares and Hong Kong stocks closed higher, though equities slid in South Korea. Treasuries were flat, while oil traded below $49 a barrel in New York.

While the year started optimistically following solid U.S. employment data and signs the Federal Reserve is turning more dovish, there’s still plenty for investors to worry about. The outcome of U.S.-China trade negotiations hangs in the balance, while American lawmakers have been unable to reach agreement on a budget, leaving parts of the federal government shut down for a third week. And in Europe, machinations over Brexit continue.

“Investors are happy to go with the positive trend in the current environment but remain wary of sharp downside reactions given the moves we’ve seen over the last few weeks and months,” Nick Twidale, chief operating officer at Rakuten Securities Australia, wrote in a note. “Traders are still very much aware that the various geopolitical factors that have been so prevalent in influencing market moves over the last 12 months are still relevant.”

Here are some events investors may focus on this week:

  • U.S. President Donald Trump plans to deliver a prime-time televised address on Tuesday as he battles Democrats over his proposed border wall.
  • A U.S. delegation is in Beijing for trade talks with Chinese officials, the first face-to-face encounter since Trump and Xi agreed to a temporary truce on Dec. 1.
  • North Korea’s Kim Jong Un is visiting China ahead of a potential summit with President Trump.
  • Wednesday sees the release of minutes from the Fed’s Dec. 18-19 policy meeting. Powell will speak to the Economic Club of Washington D.C. on Thursday.
  • Britain’s Parliament resumes a debate on the Brexit withdrawal bill, with Prime Minister Theresa May seeking to avoid defeat in a vote set for the week of Jan. 14.

These are the main moves in markets:

Stocks

  • Futures on the S&P 500 Index increased 0.5 percent as of 8:56 a.m. London time, the highest in more than three weeks.
  • The Stoxx Europe 600 Index climbed 0.6 percent to the highest in more than three weeks.
  • The U.K.’s FTSE 100 Index jumped 0.5 percent to the highest in almost four weeks.
  • Germany’s DAX Index climbed 0.4 percent to the highest in more than three weeks.
  • The MSCI Asia Pacific Index fell 0.1 percent.
  • The MSCI Emerging Market Index declined 0.5 percent.

Currencies

  • The Bloomberg Dollar Spot Index climbed 0.2 percent.
  • The euro declined 0.2 percent to $1.1446.
  • The British pound fell 0.1 percent to $1.2766.
  • The Japanese yen dipped 0.2 percent to 108.91 per dollar, the weakest in a week.

Bonds

  • The yield on 10-year Treasuries fell less than one basis point to 2.70 percent.
  • Germany’s 10-year yield increased two basis points to 0.24 percent, the highest in a week.
  • Britain’s 10-year yield gained two basis points to 1.275 percent.
  • The spread of Italy’s 10-year bonds over Germany’s decreased less than one basis point to 2.6755 percentage points.

Commodities

  • West Texas Intermediate crude rose 0.3 percent to $48.65 a barrel, hitting the highest in more than three weeks with its seventh consecutive advance.
  • Gold decreased 0.5 percent to $1,283.07 an ounce, the weakest in a week.