Stocks fall as trade talk weighs; Treasuries drop

Bloomberg

US stock futures fell as trade tensions with China flared and investors assessed comments from a Federal Reserve official. Treasuries declined.
S&P 500 futures dropped after President Donald Trump threatened China with more tariffs days before a sit-down with his counterpart Xi Jinping. Apple looked set to fall deeper into a bear market as Trump suggested levies on mobile phones. The 10-year Treasury yield rose as Fed Vice Chairman Richard Clarida backed gradual rate hikes. The dollar was flat.
In Europe, raw materials producers led stock indexes lower, while bonds rose. The pound weakened as traders mulled prospects for parliamentary approval of the Brexit deal, which Trump said could jeopardise Britain’s ability to strike a trade pact with the US West Texas crude declined.
Foreign commerce remains firmly in investors’ minds before leaders of the two biggest economies meet in Buenos Aires at the end of the week. Trump indicated in an interview with the Wall Street Journal that, besides a scheduled bump-up in tariff rates on $200 billion of Chinese imports in January, he’d also slap new duties on the remaining imports that have so far escaped his levies, depending on how negotiations proceed. That may weigh on optimism for US stocks, which climbed on Monday amid hopes a strong start to the holiday season will keep growth on track.
Fed speakers will be watched for the latest thinking on the trajectory of interest rates. Chairman Jerome Powell’s speech on Wednesday will be parsed for any hints on prospects for a pause in rate increases next year after traders reduced expectations for the pace of monetary policy tightening.
Elsewhere, emerging market shares climbed. Bitcoin steadied below $3,700 after plunging 14 percent on Monday.
Presidents Donald Trump and Xi Jinping plan to meet at the G-20 summit in Argentina that kicks off on Friday. Federal Reserve Chairman Powell addresses the New York Economic Club on Wednesday.
The S&P 500 Index futures declined 0.4 percent in New York. The Stoxx Europe 600 Index fell 0.6 percent. The MSCI All-Country World Index decreased 0.1 percent. The MSCI Emerging Market Index increased 0.2 percent to the highest in more than a week.
The Bloomberg Dollar Spot Index climbed less than 0.05 percent to the highest in two weeks. The euro declined less than 0.05 percent to $1.1325, the weakest in almost two weeks. The Japanese yen dipped less than 0.05 percent to 113.59 per dollar, the weakest in more than a week. The British pound fell 0.5 percent to $1.2763, the weakest in four weeks on the biggest fall in a week. The MSCI Emerging Markets Currency Index fell less than 0.05 percent to the lowest in more than a week.
The yield on 10-year Treasuries climbed less than one basis point to 3.06 percent.