US equity futures advance amid twists in trade war

Bloomberg

US equity-index futures turned higher along with shares in Europe after a down session in Asia on Monday as investors assessed the latest developments in the Sino-American trade war. The dollar strengthened.
Contracts on all three main US equity indexes rose after President Donald Trump said that prospects for a deal with China were better now than at any time since talks began last year, even as a top state-media editor in Beijing questioned his version of events. The Euro Stoxx 50 Index held onto gains made after Trump’s comments.
The rally in Treasuries slowed, with 10-year yields close to a three-year low as trading resumed after a pause during the European morning with Britain’s market closed for a holiday. The euro slipped as German business confidence fell to the lowest in almost seven years. Asia trading mostly closed before Trump’s latest comments, and stocks fell broadly, led by Hong Kong. The onshore yuan weakened for an eighth straight session.
The trade war’s latest twists and turns punctuated an already tumultuous August, with markets buffeted by signs of slowing global economic growth and violent protests in Hong Kong. Regardless of Monday’s developments, the risk of recession may have crept higher when protectionism moves escalated, when Trump announced fresh levies on Chinese imports and called for American companies to pull out of Asia’s largest economy after China said it would impose retaliatory tariffs on US goods.
“The recent developments have left financial markets and the global economy in a far more vulnerable position,” said Eleanor Creagh, a strategist in Sydney at Saxo Capital Markets. “As a synchronised global slowdown takes effect and commodity prices roll over there is no reason that bond yields should be heading higher.”
Elsewhere, oil futures reversed their earlier declines from last week, when China announced tariffs on US oil for the first time. The yen gave back some of its 1 percent increase from the previous session.
Europe’s Stoxx 50 Index climbed 0.6 percent in New York. Futures on the S&P 500 Index rose 0.5 percent. Hong Kong’s Hang Seng Index sank 1.9 percent. The Shanghai Composite Index decreased 1.2 percent.
The Bloomberg Dollar Spot Index rose 0.3 percent to 1,209.33. The euro dipped 0.2 percent to $1.1117. The British pound fell 0.2 percent to $1.2239. Fifteen of 24 emerging-market currencies tracked by Bloomberg weakened.
The yield on 10-year Treasuries decreased two basis points to 1.52 percent. The yield on two-year Treasuries dipped two basis points to 1.51 percent. Germany’s 10-year yield rose one basis point to -0.66 percent. Britain’s 10-year yield declined four basis points to 0.481 percent. Australia’s 10-year yield decreased nine basis points to 0.889 percent.
Gold rose 0.2 percent to $1,530.24 an ounce. West Texas Intermediate crude climbed 1 percent to $54.72 a barrel.