Tech weighs on US stocks; bonds, greenback advance

Bloomberg

US equities fell as tech heavyweights weighed on benchmarks, while Treasuries gained ahead of the Federal Reserve’s meeting. The pound tumbled more than 1 percent.
The S&P 500 Index fell as Amazon, Facebook and Netflix all sank more than 1 percent. Apple gained ahead of its earnings announcement on Tuesday.
Drug companies got a boost from surging Mylan NV after the generic drugmaker and Pfizer Inc. announced merger plans. European shares rose, led by UK stocks, after the London Stock Exchange Group’s investors backed its proposed $27 billion deal to acquire Refinitiv.
The 10-year Treasury yield declined for a second day to 2.05 percent before the Fed’s anticipated rate cut on Wednesday. The dollar climbed to the highest in almost two months before a new round of trade talks between the US and China get underway this week.
Investors will be picking through any developments on trade as Chinese and American negotiators were expected to gather on Tuesday for two days of talks, three months after negotiations broke down. Neither side is signalling much hope for a breakthrough.
Meanwhile, Fed Chairman Jerome Powell’s post-meeting press conference on Wednesday will provide an opportunity to gauge the trajectory of US rates after the central bank is tipped to ease policy.
On a related theme, traders will eagerly await monthly employment data from the world’s largest economy at the tail end of the week.
“The market has fully baked in a 25 basis point cut,” Eugenia Victorino, SEB head of Asia strategy, said on Bloomberg TV.
Corporate earnings will remain a focal point as investors stay vigilant for any signs that a global economic slowdown is being reflected in companies’ bottom lines. Among major earnings this week are Apple, Rio Tinto and carmakers Toyota and BMW.
Earnings include: Nintendo, Qualcomm, AMD, Siemens, Sony, Credit Suisse, Nomura, Toyota, Honda, Ferrari, GM, BMW, Rio Tinto, ConocoPhillips, BP, Shell, Vale, GE, Altria.
US Trade Representative Robert Lighthizer and his team were expected to meet their Chinese counterparts in Shanghai on Tuesday.
Fed officials began their two-day meeting on monetary policy in Washington on Tuesday. Chairman Jerome Powell will hold a press conference following the FOMC’s decision on Wednesday.
The Bank of England policy decision is due on Thursday.
The S&P 500 Index fell 0.3 percent in New York. The Stoxx Europe 600 Index rose 0.2 percent to the highest in more than three weeks. Germany’s DAX Index gained 0.4 percent. The UK’s FTSE 100 Index increased 2 percent to the highest in almost a year.
The MSCI Asia Pacific Index decreased 0.4 percent to the lowest in more than a week.
The Bloomberg Dollar Spot Index rose 0.1 percent to the highest in almost two months. The euro declined 0.1 percent to $1.1122, the weakest in more than two years. The Japanese yen was little changed at 108.68 per dollar.
The British pound fell 1 percent to $1.226, the weakest in more than two years.
The yield on 10-year Treasuries dipped two basis points to 2.05 percent. Britain’s 10-year yield fell five basis points to 0.635 percent, the lowest in about three years. Germany’s 10-year yield declined two basis points to -0.40 percent, the lowest in more than three weeks.
Gold rose 0.2 percent to $1,421.79 an ounce. West Texas Intermediate crude gained 0.3 percent to $56.38 a barrel.