Stocks mixed under cloud of trade feud; crude gains

Bloomberg

US index futures edged higher, stocks in Europe slipped and shares in Asia were mixed on Wednesday as investors awaited new developments in the increasingly unpredictable Sino-American trade war. Treasuries and the dollar were steady.
Contracts on all three major US stock indexes gained, while technology companies and insurers led a decline on the Stoxx Europe 600 index. Benchmarks nudged higher in Sydney and Seoul, were little changed in Tokyo, and slipped in Shanghai and Hong Kong. The 10-year Treasury yield stayed below 1.50 percent, near a three-year low.
The euro was flat, the pound dropped and gilts gained after the Queen approved UK prime minister Boris Johnson’s plan to suspend parliament from mid-September to mid-October, increasing the risk of a no-deal Brexit.
European bonds advanced, led by Italian debt as talks to form a coalition government progressed. Crude oil extended gains after an industry report showed a bigger-than-expected drop in American crude inventories and as Iran all but ruled out a meeting with the US.
President Donald Trump’s flip-flops on trade have left investors jumpy as they await his next moves and as optimism for a resolution becomes more difficult to sustain. With the latest round of tariffs from both sides due to be staggered from September 1, China appears to be bracing for the worst and the US leader’s credibility is becoming a key impediment to a deal.
In addition, traders have to contend with Trump’s attacks on the Federal Reserve, which have clouded the outlook for monetary policy. “Hope gave way to pragmatic realism about the outlook for the China-US trade dispute,” Greg McKenna, strategist at McKenna Macro, wrote in a note. “The market is still trying to get a feel for where it’s at and what it thinks as we get closer
to the deadline for the tariffs this week.”
The second reading of Q2 US GDP on Thursday is expected to refine estimates of slightly lower economic growth.
Bank of Korea policy decision and briefing is on Friday. Euro-zone CPI data for August is also due on Friday.
The Stoxx Europe 600 Index fell 0.4 percent in New York. Futures on the S&P 500 Index gained 0.2 percent. The UK’s FTSE 100 Index jumped 0.4 percent. The MSCI All-Country World Index dipped 0.1 percent. The MSCI Emerging Market Index was little changed.
The Bloomberg Dollar Spot Index was little changed. The euro was little changed at $1.1095. The British pound sank 0.7 percent to $1.2201. The Japanese yen was little changed at 105.78 per dollar.
The yield on 10-year Treasuries dipped less than one basis point to 1.47 percent. The yield on two-year Treasuries dipped one basis point to 1.51 percent.
Britain’s 10-year yield declined four basis points to 0.461 percent. Germany’s 10-year yield fell two basis points to -0.71 percent.