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Stocks, Futures Drop Ahead of Trump’s China Talk: Markets Wrap

Bloomberg logoBloomberg 5/29/2020 Yakob Peterseil

(Bloomberg) -- Stocks fell with U.S. futures on Friday as President Donald Trump’s planned press conference on China threatened to further stoke tensions between the world’s two largest economies. Treasuries gained alongside most European bonds.

The Stoxx 600 Index declined for the first time in five days, dragged lower by travel shares and automakers, as deteriorating Sino-American ties cast a cloud over a global stock rally spurred by reopening economies. Contracts on the main U.S. equity benchmarks nudged lower after Trump told reporters he would announce what the administration would do “with respect to China,” following Beijing’s moves to enact a law that may curb freedoms in Hong Kong. The White House didn’t immediately specify a time.

The euro extended gains after the region’s inflation rate fell to the lowest in four years, adding to reasons for authorities to expand monetary stimulus. The dollar weakened for a second day.

a screenshot of a cell phone: Gold-backed ETF holdings climb for six straight months, longest streak since 2017 © Bloomberg Gold-backed ETF holdings climb for six straight months, longest streak since 2017

Global stocks have mostly shrugged off escalating tensions between Washington and Beijing, but Trump’s planned press conference appears to have spooked investors. It comes amid growing good news on the economic front as governments add to stimulus and ease lockdown measures in the wake of the coronavirus. Meanwhile, clues on the next stages for Federal Reserve policy may also come Friday, when Chairman Jerome Powell participates in a virtual discussion.

“I’m very cautious on my medium and even long-term outlook for the markets,” Kate Jaquet, a portfolio manager at Seafarer Capital Partners LLC, said on Bloomberg TV. “I perceive there to be a very large disconnect between stock-market valuations across the globe and underlying company fundamentals.”

Elsewhere, crude oil trimmed its biggest monthly advance on record, while gold edged higher.

Here are some key events coming up:

Trump is expected to hold a news conference Friday where he will discuss steps with regard to China.Powell takes part in a question-and-answer discussion on Friday.

These are some of the main moves in markets:

Stocks

Futures on the S&P 500 Index declined 0.5% as of 10:23 a.m. London time.The Stoxx Europe 600 Index sank 1.1%.The MSCI Asia Pacific Index dipped 0.2%.The MSCI Emerging Market Index climbed 0.2%.

Currencies

The Bloomberg Dollar Spot Index declined 0.3%.The euro jumped 0.5% to $1.1132.The British pound dipped 0.1% to $1.2304.The onshore yuan strengthened 0.1% to 7.14 per dollar.The Japanese yen strengthened 0.4% to 107.21 per dollar.

Bonds

The yield on 10-year Treasuries decreased two basis points to 0.67%.The yield on two-year Treasuries decreased one basis point to 0.16%.Germany’s 10-year yield declined one basis point to -0.43%.Britain’s 10-year yield fell two basis points to 0.193%.Japan’s 10-year yield climbed less than one basis point to 0.005%.

Commodities

West Texas Intermediate crude declined 3.9% to $32.41 a barrel.Brent crude dipped 3.5% to $34.07 a barrel.Gold strengthened 0.4% to $1,725.46 an ounce.

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©2020 Bloomberg L.P.

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