Stocks advanced, while Treasuries fell as the prospect of more trade talks between the U.S. and China helped settle investors' nerves.
The S&P 500 Index rebounded from its biggest decline in two weeks, following shares in Europe and Asia, as China appeared to strike a conciliatory tone in reaction to President Donald Trump's newest escalation of the trade war between the two countries. Ten-year Treasury yields pared gains, while the dollar declined against most peers after U.S. consumer prices rose less than forecast in June. West Texas crude held above $70 a barrel.
"Until you get resolution of the trade talks you're going to see international markets underperform relative to the U.S.," said Kevin Nicholson, chief market strategist at RiverFront Investment Group in Richmond, Virginia. The S&P 500 Index will probably trade between 2,600 and 2,800, with support from earnings growth and headwinds from trade tensions, he said. "Commodities are going to be a loser" in the trade war, and RiverFront has cut back its exposure, he said.
While markets welcome the lull in the escalation of trade tensions, they'll remain on edge as they await a potential reprisal from Beijing to Trump's latest volley. Investors concerns have overshadowed economic data hinting that global growth is on track as well as the start of earnings season.
Elsewhere, Turkey's lira recovered from a record low. The won fell, with little reaction to the Bank of Korea holding its benchmark rate at 1.5%.
These are some events to look out for this week:
Earnings season gets into gear with JPMorgan Chase & Co. and Citigroup Inc. among the largest companies due to give results, as well as India's Infosys Ltd. Chinese trade data due at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said.
And here are the main market moves:
The S&P 500 Index rose 0.5% as of 9:33 a.m. New York time. The Stoxx Europe 600 Index advanced 0.6%. The MSCI All-Country World Index gained less than 0.05%. The MSCI Asia Pacific Index increased 0.1%. The MSCI Emerging Market Index rose 0.3%.
The Bloomberg Dollar Spot Index declined 0.2%. The euro was little changed at $1.126. The British pound rose 0.1% to $1.3223. The Japanese yen decreased 0.4% to 112.46 per dollar.
The yield on 10-year Treasuries rose one basis point to 2.86%, the highest in more than a week. Germany's 10-year yield dipped less than one basis point to 0.37%. Britain's 10-year yield declined one basis point to 1.294%.
West Texas Intermediate crude rose 0.1% to $70.44 a barrel. Brent crude rose 1.4% to $74.41 a barrel, the biggest advance in almost two weeks. Copper gained 0.9% to $2.77 a pound. Gold increased 0.1% to $1,243.51 an ounce.