Stocks Drop as Investors Weigh Trade Prospects: Markets Wrap

According to the stocks report updates, the Stocks in Europe dropped alongside U.S. Equity futures after China appeared to pour cold water on a partial trade deal touted by President Donald Trump, saying it wanted to iron out details before signing it. European bonds gained.

The Stoxx Europe 600 index extended a decline, led by banks and miners, after Bloomberg reported China wants further talks before
sealing the “phase one” agreement announced by President Donald Trump. S&P 500 futures turned lower, signaling U.S. equities may run out of steam after rising to within 1.8% of a record close Friday. Stocks had climbed earlier from Sydney to Hong Kong, helping sustain a rally in emerging-market assets after after the positive conclusion of the latest round of trade talk.

The yuan erased most of its earlier gains offshore. Treasury futures climbed, with the market for cash bonds closed for American and Japanese holidays.

The limited agreement outlined by China and the U.S. on Sunday kept prospects alive for a comprehensive trade deal and provided an initial boost to risk assets. But investor skepticism proved well-founded after Bloomberg reported that China wants to hammer out the fine print, with some sticking points remaining. Worse-than-expected September trade figures in China underscored the growing pressure on both Trump and Xi to reach a deal to avert a wider slowdown in the global economy.

“Let’s not get carried away,” said Raoul Leering, head of international trade research at ING Bank NV. “There is a very tough journey ahead for the U.S. and Chinese negotiators to cut a deal that really has substance.”

Focus will soon turn to earnings season that begins with big U.S. banks including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley.

Elsewhere, the pound retreated after rocketing for the past two sessions as European Union negotiators warned that Brexit plans from U.K. Prime Minister Boris Johnson are not yet good enough to be the basis for an agreement. Turkey’s stock market and currency fell as the U.S. and Europe increased threats to impose sanctions over the incursion into Syria. And crude oil dropped after surging the most in almost a month on Friday.

• Bloomberg