Stocks Start Week of Trade Talks on Muted Note: Markets Wrap

(Bloomberg) -- U.S. equities were mixed and trading volume was muted at the start of a week that could be pivotal for global trade, while lawmakers in Washington continue to negotiate a contentious spending bill. The dollar strengthened for an eighth day, and 10-year Treasuries fell.

The S&P 500 finished higher after drifting most of the session, with advancing stocks outnumbering decliners. A faltering communication-services sector countered a gain in industrials driven by railroad shares. Health-care companies -- including UnitedHealth, Pfizer and Merck -- weighed on the Dow Jones Industrial Average. Volumes were lower than average, suggesting some people are waiting on the sidelines for more potent market catalysts to emerge.

Investors are weighing the prospects for the success of this week’s high-level U.S.-China trade talks -- coming just days before the March 1 deadline for higher tariffs. The threat of a shutdown in Washington also looms, with political tensions flaring again between Congress and the president. Equities gained in China as exchanges reopened after a holiday. Japan’s securities markets were shut for a holiday, and the yen weakened.

“Of the events looming on the horizon, the one we’re focused on most is the U.S.-China trade right now,” said Mona Mahajan, U.S. investment strategist at Allianz Global Investors in New York. “And I think that’s been an overhang not only on U.S. equities, but clearly on Chinese equities and the economy there as well.”

Earnings season continues with the likes of Michelin reporting today, and Nissan and Cisco later this week. Yields rose on Treasuries and most European sovereign bonds. The pound stayed lower after the U.K. economy unexpectedly shrank in December.

Elsewhere, West Texas crude futures hovered above $52 a barrel, while gold headed for its first drop in three sessions. The Swiss franc swooned almost 1 percent at the start of Asia trading Monday in a mini-recurrence of the “flash crash” that roiled FX markets early last month.

Here are some key events coming up:

• Earnings season continues with reports from companies including Michelin, Nissan, Cisco, Vivendi, Nvidia, Nestle, Coca-Cola and Credit Suisse.
• Sweden’s Riksbank is expected to keep interest rates at minus 0.25 percent on Wednesday after the first increase in more than seven years in December.
• Data Wednesday is expected to show U.S. consumer prices rose 0.1 percent in January, after falling 0.1 percent in December.
• If no deal is reached on the U.S-Mexico border wall, parts of the federal U.S. government may shut down again later this week when stopgap government funding expires.

These are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.1 percent, as of 4 p.m. New York time.
• The Nasdaq 100 declined 0.1 percent while the Dow Jones Industrial Average fell 0.2 percent.
• The Stoxx Europe 600 Index gained 0.9 percent.
• The MSCI Emerging Market Index fell 0.1 percent.

Currencies

• The Bloomberg Dollar Spot Index climbed 0.5 percent, hitting the highest in almost six weeks.
• The euro fell 0.4 percent to $1.1277.
• The British pound dropped 0.6 percent to $1.2861, the weakest in almost a month.
• The Japanese yen dipped 0.6 percent to 110.38 per dollar, the weakest in more than six weeks.

Bonds

• The yield on 10-year Treasuries rose two basis points to 2.66 percent, the first advance in a week.
• Germany’s 10-year yield jumped three basis points to 0.12 percent.
• Britain’s 10-year yield increased three basis points to 1.18 percent.

Commodities

• West Texas Intermediate crude decreased 0.6 percent to $52.38 a barrel, the lowest in two weeks.
• Gold sank 0.4 percent to $1,308.41 an ounce.

--With assistance from Adam Haigh and Todd White.

To contact the reporters on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net;Reade Pickert in New York at epickert@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn

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