U.S. equity futures and European stocks recouped some of the previous session’s losses on hopes for progress in the American-Chinese trade dispute, even as Asian shares dropped overall. Crude oil headed for the lowest close this year.
Contracts on the Dow, Nasdaq and S&P 500 all traded higher and the Stoxx Europe 600 Index rose for the first time in three days, with telecom firms leading the way after Vodafone Group Plc delivered better than expected quarterly results. The mood was buoyed after a report that China’s Vice Premier Liu He will visit the U.S. to pave the way for a meeting between the leaders of the two biggest economies later this month, which also supported some commodity currencies. Key Asian indexes slid with Apple Inc. suppliers under pressure after the iPhone maker fell on signs of a deteriorating sales outlook.
WTI oil dropped for a twelfth day, the longest losing streak on record after Trump criticized top OPEC producer Saudi Arabia’s plan to cut output. Treasuries climbed and the dollar fell from an 18-month high. Britain’s pound pared losses from the past three days after Prime Minister Theresa May said talks with the European Union were in the “endgame” and datashowing U.K. wage growth accelerated.
Trade worries have hung over markets for months, clouding the economic outlook and helping compound an ongoing sell-off in equities. While comments from Chinese Premier Li Keqiang in Singapore Tuesday hinted at a more optimistic outlook, sentiment overall remains fragile as the Federal Reserve pursues its path of policy normalization and tech companies continue to slide.
“We always talk about that proverbial wall of worry and that wall right now is pretty high,” David Kudla, chief executive officer of Mainstay Capital Management, said on Bloomberg TV. “We have the issues in China with the growth concerns there, we have the issues in Europe with the battle between Italy and the EU, the U.K. getting ready for Brexit. There is some guidance lower on earnings, and a Federal Reserve that is going to raise rates.”
Elsewhere, the euro recovered from its weakest against the dollar since June 2017, with Italy due to resubmit its budget. The country’s bonds stayed lower after a debt auction. Emerging market equities and currencies were steady.
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