Stocks Slip With U.S. Futures on Fresh Trade Worry: Markets Wrap

(Bloomberg) -- Stocks slipped in Europe along with U.S. equity futures after President Donald Trump signed a bill backing Hong Kong protesters, raising concerns about the prospects for an interim trade deal between the world’s two largest economies. Gold edged up.

The Stoxx Europe 600 Index tracked declines in much of Asia, with automaker shares the biggest losers. Contracts on the main U.S. benchmarks all traded slightly lower as China threatened to retaliate against Trump’s move, though Beijing stopped short of any immediate action. Hong Kong shares pared an initial retreat to post a modest drop alongside Japanese, Chinese and South Korean stocks.

European sovereign bonds edged lower. The pound trimmed some of Wednesday’s gain against the dollar. Treasuries didn’t trade because of the Thanksgiving holiday; U.S. equities are also shut.

With volumes light thanks to the U.S. break and little in the way of direct trade news, Trump’s signing of a bill increasing American scrutiny of Hong Kong was one of the few narratives for investors on Thursday. The development is a potential headwind to stocks at a time when a global benchmark of developed- and emerging-market equities remains just below its all-time record.

“The bad news is, the trade war is still on,” Andy Kapyrin, director of research at RegentAtlantic Capital LLC, told Bloomberg TV. “I really don’t see substantial progress on trade with China,” and markets will perceive Trump’s signing of the bill negatively, he said.

Elsewhere, oil fell for a second day after U.S. crude production rose to a record. A drop in Latin American currencies turned into a rout Wednesday amid political unrest in the region. Brazil’s real opened firmer on Thursday following the central bank’s decision to hold a spot auction and Chile’s central bank announced a $20 billion intervention package after the peso tumbled to a record low.

Here are some key events coming up this week:

• Euro area inflation for October is due Friday.
• The Bank of Korea sets policy on Friday.

These are the main moves in markets:

Stocks

• Futures on the S&P 500 Index declined 0.1% as of 4:23 p.m. New York time.
• The Stoxx Europe 600 Index fell 0.1%.
• The MSCI Asia Pacific Index decreased 0.2%.
• The MSCI Emerging Market Index dipped 0.2%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro climbed 0.1% to $1.1009.
• The British pound dipped 0.1% to $1.291.
• The onshore yuan sank 0.2% to 7.0315 per dollar.
• The Japanese yen was little changed at 109.51 per dollar.

Bonds

• Germany’s 10-year yield rose one basis point to -0.36%.
• Britain’s 10-year yield gained less than one basis point to 0.673%.
• Japan’s 10-year yield climbed two basis points to -0.105%.

Commodities

• West Texas Intermediate crude climbed 0.2% to $58.24 a barrel.
• Iron ore fell 0.2% to $84.81 per metric ton.
• Gold gained 0.1% to $1,456.27 an ounce.

--With assistance from Fergal O'Brien and Adam Haigh.

To contact the reporter on this story: Yakob Peterseil in London at ypeterseil@bloomberg.net

To contact the editor responsible for this story: Sam Potter at spotter33@bloomberg.net

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