US equity futures, Europe stocks retreat; dollar edges higher

Bloomberg

US equity futures followed declines across Europe as investors awaited fresh clues on the outlook for global trade and growth. The dollar edged higher with Treasuries.
Contracts on the Nasdaq, Dow Jones and S&P 500 indexes all turned lower as traders returned from the long weekend and before the next round of talks between America and China to try to reach a trade deal. Walmart Inc. was the biggest name reporting earnings, and the retailer’s shares rose in pre-market trading as it announced the best holiday quarter in a decade.
Banks led the Stoxx Europe 600 Index down following disappointing earnings from HSBC Holdings and increasingly dovish signals from the region’s central bank. Automakers were also under pressure as the European Union vowed prompt retaliation if the US imposes tariffs on imported vehicles.
Italian bonds fell while most European notes climbed.
In Asia, Bank of Japan Governor Haruhiko Kuroda told parliament the central bank would consider extra monetary easing if required, helping lift the Topix index and sending the yen lower. Shares in China were little changed as equities in Hong Kong dropped.
With earnings season nearing its end, the latest minutes from both the Federal Reserve and European Central Bank due this week and US President Donald Trump weighing an extension of the deadline for a trade deal with China, investors have plenty to ponder right now. Uncertainty over the outlook for global growth hangs over everything, and traders will be hoping for some good news from the world’s two largest economies when talks resume in Washington on Tuesday.

“There’s a recession coming,” Steen Jakobsen, the chief economist at Saxo Bank, told Bloomberg Television’s Anna Edwards. He reckons markets are too optimistic on a trade deal between the U.S. and China. “There will by some Pyrrhic victory for the two sides to claim and extend the timeline, but in terms of material impact, no,” he said.

Elsewhere, the pound advanced as U.K. and European officials work on new legal text for the contentious Irish border backstop. The Australian dollar swung to a loss after the nation’s central bank reaffirmed mounting concerns over consumer spending. Gold traded at the highest since April amid increasing bullishness and West Texas crude advanced to trade at about its highest in almost three months.