US equity futures gain with stocks; Treasuries retreat

Bloomberg

US equity futures climbed with European and Asian stocks as investors took confidence from signs that America and China are inching towards a trade deal. Treasuries fell, while the yuan strengthened past 7 for the first time since August.
Contracts on the S&P 500, Dow Industrials and Nasdaq 100 all pointed to a positive start on Wall Street, following records for each of the underlying gauges spurred by mounting optimism the world’s two largest economies will sign the first phase of an agreement. The Stoxx Europe 600 Index nudged up, with gains in mining shares offsetting declines for real estate firms, a day after the gauge advanced to a four-year high. Oil rose for a third day, while gold slipped towards $1,500.
In Asia, Japanese shares led gains as Tokyo traders caught up after a long weekend, with more modest advances in Shanghai, Hong Kong and Seoul. Australia’s dollar rose after its central bank left interest rates unchanged and said past easing steps are offering support.
Investors have been in a more bullish mood lately amid signs of progress in the trade war, which is alleviating one of the biggest headaches for markets as they approach year-end. Add in solid earnings and rebounding growth expectations, and a risk-on rotation has been taking hold. In the latest trade news, China is reviewing locations in the US where President Xi Jinping would be willing to meet with President Donald Trump to sign a pact, people familiar with the plans said.
“The sweet spot for global equities looks even more pronounced,” Chris Weston, head of research at Pepperstone Group Ltd, said in a note. “The current debate is not whether you are bullish, but whether there is too much short-term euphoria. At some stage valuation will matter, or at least cap the upside.”
Meanwhile, markets got further support after China’s central bank reduced the cost of one-year funds to banks for the first time since 2016, easing concerns about tightening liquidity. And Bank of Japan Governor Haruhiko Kuroda suggested his nation could sell more super-long term bonds, reflecting a desire for a steeper yield curve.
Earnings are due from companies including: SoftBank and BMW on Wednesday; Walt Disney, Toyota, Deutsche Telekom on Thursday.
Regional Federal Reserve presidents including Charles Evans, John Williams and Patrick Harker speak at events on Wednesday.
Bank of England monetary decision on Thursday. The USDA World Agricultural Supply and Demand Estimates Report for November comes out on Friday.
Futures on the S&P 500 Index increased 0.2% in New York. The Stoxx Europe 600 Index climbed 0.2%. The Shanghai Composite Index gained 0.5%. The MSCI Emerging Market Index advanced 0.6%.
The Bloomberg Dollar Spot Index was little changed. The euro dipped 0.1% to $1.1112. The British pound gained 0.1% to $1.2903. The onshore yuan gained 0.5% to 6.999 per dollar. The Japanese yen fell 0.2% to 108.84 per dollar.
The yield on 10-year Treasuries jumped four basis points to 1.82%. The yield on two-year Treasuries increased two basis points to 1.60%. Germany’s 10-year yield gained two basis points to -0.33%. Britain’s 10-year yield decreased less than one basis point to 0.723%. Japan’s 10-year yield gained five basis points to -0.122%.
West Texas Intermediate crude gained 0.7% to $56.93 a barrel. Iron ore increased 0.7% to $80.77 per metric ton. Gold fell 0.5% to $1,502.02 an ounce.