Futures dip as US-China trade talks fall short

by Andre Janse van Vuuren and Allegra Catelli

US stock futures slipped after the Trump administration’s trade talks with China ended with thinly detailed outcomes.

S&P 500 contracts edged lower 0.1%, leaving the US benchmark poised to snap a three-day winning streak as it hovers near all-time highs. European and Asian stocks advanced. US Treasuries slid ahead of May’s inflation report, with the 10-year yield rising one basis point to 4.48%. The dollar was little changed.

Meanwhile, Tesla Inc. rose 2.3% in premarket trading, outperforming Magnificent 7 counterparts after Elon Musk expressed regret over his recent social-media outburst directed at President Donald Trump.

Financial markets were closely watching whether the world’s top two economies could tamp down tensions that economists say have tipped the global economy into a downturn. After some 20 hours of negotiations in London, US officials said both sides had established a framework to revive the flow of sensitive goods, even though the plan still needs sign-off from Trump and Xi Jinping.

“A preliminary agreement doesn’t fill me with enthusiasm in terms of this being resolved,” Guy Miller, chief market strategist at Zurich Insurance Co., told Bloomberg TV. “This is going to continue to be pushed down the line.”

Wednesday’s consumer price data is likely to reinforce the Federal Reserve’s wait-and-see stance toward further interest-rate cuts. Traders are increasingly betting that policymakers will cut rates only once this year amid signs of resilient growth and sticky inflation.

Economists expect a modest impact from tariff pass-through for goods that are mostly imported, with inflation seen rising 0.3% from April after increasing 0.2% the previous month, excluding the volatile food and energy categories.

The so-called core CPI, which is regarded as a better indicator of underlying inflation, is seen accelerating for the first time this year — to 2.9% — on an annual basis.

“It is not expected to be market-moving for now but that could increase the scope for an impact from a big surprise,” said Geoff Yu, FX and macro strategist at Bank of New York Mellon Corp. “We expect a more data-driven session as some repositioning is needed ahead of a key central bank week next week.”

Corporate Highlights:

• UniCredit SpA will pull the takeover bid for Banco BPM SpA if the Italian government doesn’t clarify the conditions imposed on the deal, Chief Executive Officer Andrea Orcel said.
• Zara-owner Inditex SA’s sales picked up in the early weeks of the second quarter, showing that a cooling global economy hasn’t stopped customers from loading up on its fast-fashion products.
• Publicis Groupe SA has won a major new client, snagging the $1.7 billion ad portfolio for M&Ms and Snickers owner Mars Inc. from WPP Plc, people familiar with the matter said.
• AstraZeneca Plc said a handful of patients with lupus went into remission after getting an experimental treatment,
• A consortium led by KKR & Co. raised its bid in a takeover battle for Assura Plc, valuing the UK healthcare landlord at £1.7 billion ($2.3 billion).
• VietJet Aviation JSC is in talks to order about 100 additional Airbus SE narrowbody jets, Bloomberg News has reported.
• Bain Capital, KKR & Co. and Lone Star are among investment firms that have advanced to the second round of bidding for the real estate unit of Sapporo Holdings Ltd., Bloomberg News has reported.
• Nintendo Co. sold 3.5 million-plus units of the Switch 2 in just four days, a record-breaking start for the company’s first new console in eight years.

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.1% as of 9:59 a.m. London time
• S&P 500 futures fell 0.1%
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average fell 0.1%
• The MSCI Asia Pacific Index rose 0.3%
• The MSCI Emerging Markets Index rose 0.6%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1431
• The Japanese yen fell 0.1% to 145.07 per dollar
• The offshore yuan was little changed at 7.1881 per dollar
• The British pound was little changed at $1.3494

Cryptocurrencies

• Bitcoin fell 0.4% to $109,582.97
• Ether fell 0.2% to $2,769.38

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.48%
• Germany’s 10-year yield advanced two basis points to 2.54%
• Britain’s 10-year yield advanced five basis points to 4.59%

Commodities

• Brent crude rose 0.2% to $67.01 a barrel
• Spot gold rose 0.6% to $3,344.57 an ounce

This story was produced with the assistance of Bloomberg Automation.

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