US stocks pare gains; bonds advance, greenback slides

Bloomberg

US stocks pared an advance as falling financial shares countered gains spurred by trade optimism. Treasuries rose and the dollar fell.
The S&P 500 clung to a second day of gains after President Donald Trump struck a softer tone towards China at the Group of Seven summit.
Declines by major banks weighed on the benchmark as the 10-year Treasury yield fell below 1.50 percent. Philip Morris International Inc paced decliners after the company confirmed it was in merger talks with Altria Group Inc.
The euro was little changed following data showing Germany was on the brink of a recession, and the pound gained as opposition politicians stepped up efforts to prevent a no-deal Brexit.
Trump’s apparent deescalation of trade tensions at the
G-7 helped ease investors nerves that had been stretched leading into the weekend after a tit for tat between the two countries sent stocks tumbling. However, there’s still underlying caution as Germany offered up fresh evidence that protectionism is weighing on global growth. Volatility remains relatively high as traders reflect on previous periods of calm in the trade war that were quickly ended by surprises.
“The markets are back in repair mode again after policymakers played nice at the G7. We still think this backdrop relies on sentiment and positioning than any real progress in the trade wars,” Mark McCormick, global head of FX strategy at TD Securities, wrote in a note.
“Given the recent escalation from China, we suspect that the US will need to make concessions to support a meaningful recovery. That’s unlikely, increasing the prospects of renewed stress.”
Elsewhere, Hong Kong Chief Executive Carrie Lam said her government can handle unrest without assistance from Chinese forces, and still wants to hold talks with protesters despite a flare-up in violence.
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 S&P 500 Index rose 0.5 percent in New York. The Stoxx Europe 600 Index increased 0.7 percent. Germany’s DAX Index gained 0.9 percent. The MSCI Asia Pacific Index advanced 0.6 percent.
The Bloomberg Dollar Spot Index decreased 0.1 percent. The euro was little changed at $1.1099. The British pound gained 0.5 percent to $1.2280. The Japanese yen increased 0.3 percent to 105.83 per dollar.
The yield on 10-year Treasuries declined three basis points to 1.50 percent. The yield on two-year Treasuries fell one basis point to 1.53 percent. Germany’s 10-year yield decreased two basis points to -0.69 percent. Britain’s 10-year yield gained five basis points to 0.53 percent.
Gold advanced 0.2 percent to $1,540.90 an ounce.
West Texas Intermediate crude climbed 1 percent to $54.20 a barrel.