US futures gain, Europe shares drift; bonds slip

Bloomberg

US equity futures advanced with Asian shares on Monday while Europe stocks fluctuated as investors showed mild optimism at the start of a busy week set to be dominated by the beginning of earnings season and the signing of a partial China trade deal. Bonds, the yen and gold retreated.
Contracts on the S&P 500 signalled a rebound from last week, when the underlying gauge pulled back from record-high levels. The Stoxx Europe 600 fluctuated as gains in tech shares offset drops in automakers. The pound led decline among Group-of-10 currencies after another Bank of England (BOE) official pointed to a potential vote for a UK interest-rate cut this month; it extended as data showed the economy unexpectedly shrank.
Germany’s benchmark bond yield headed for its highest close since May. The offshore yuan strengthened past 6.9 per dollar for the first time since July. A dollar gauge edged higher and Treasuries fell across the curve as the completion of a phase one trade deal nears; President Donald Trump has said the US and China will sign the accord on Wednesday.
“Even getting to this phase-one agreement, when we weren’t sure we would get here, really shows that there’s political will to de-escalate trade tensions between China and the US,” Lucy Meagher, investment adviser at Evan’s & Partners Pty, told Bloomberg Television. “We expect that to be a positive.”
While geopolitics simmers in the background — Trump tweeted support for protesters in Iran angered at their country’s downing of a Ukrainian jet— the week looks set to be dominated more by the trade story and corporate outlook. Earnings from some of the biggest US companies are due, amid forecasts they will show the smallest growth in three years.
Elsewhere, equities advanced in all major Asian markets except Japan, where there’s a holiday, and Australia. Oil fluctuated after last week posting its steepest loss since July.
Meanwhile, trading in stocks, bonds and currencies was suspended in the Philippines because the Taal volcano to the south of the capital is belching out ash.
Phase one of the US-China trade deal is set to be signed on Wednesday in Washington.
The biggest American financial institutions kick off earnings season, including JPMorgan Chase & Co, Citigroup Inc,
Wells Fargo & Co, Bank of America Corp, Goldman Sachs Group Inc, Morgan Stanley and BlackRock Inc.
The US releases inflation data for December on Tuesday. China GDP comes on Friday.
The Stoxx Europe 600 Index gained 0.1% in London. Futures on the S&P 500 Index climbed 0.4%. The UK’s FTSE 100 Index rose 0.6%. The MSCI Asia Pacific Index rose 0.3%. The Bloomberg Dollar Spot Index climbed 0.1%.
The euro was little changed at $1.1117. The British pound fell 0.7% to $1.2975. The offshore yuan strengthened 0.3% to 6.8912 per dollar.
The yield on 10-year Treasuries rose two basis points to 1.84%. The yield on two-year Treasuries gained one basis point to 1.58%. Germany’s 10-year yield climbed two basis points to -0.18%. Britain’s 10-year yield dipped two basis points to 0.746%.
West Texas Intermediate crude declined 0.1% to $58.97 a barrel. Gold weakened 0.8% to $1,549.38 an ounce.