Opening Bell: Stocks Drift On Fears Of Trade Tariffs Deadlock; Dollar Drops

 | Nov 06, 2019 12:25

  • U.S. futures subdued on fears of trade deadlock over tariffs cutback
  • European shares drift on Societe Generale , Mark & Spencer profits fall
  • U.S. dollar retreats, flat at late July levels
h2 Key Events/h2

European shares and futures on the S&P 500, Dow and NASDAQ 100 drifted on fears of possible complications in U.S.-China trade negotiations, while bullish numbers for the U.S. service sector trimmed expectations of further Fed accommodation.

In particular, U.S. contracts were traded in a narrow range, after closing near Monday’s record highs yesterday.

The STOXX 600 returned toward the earlier lower opening after rebounding to the highest level since mid July 2015. Societe Generale (PA:SOGN) and Marks and Spencer (LON:MKS) posted a profits flop, eclipsing positive corporate results from Adidas (DE:ADSGN) and BMW (DE:BMWG).

Meanwhile, upbeat German factory orders only mildly boosted the euro, as eurozone manufacturing activity picked up slightly in October but remained near its weakest level in seven years.

In the earlier Asian session, regional equities ended mixed after Beijing was reported to be pressing for Washington to roll back tariffs before any progress on the deal could be made. Chinese officials are allegedly asking for 15% duties imposed on $125 billion of domestic goods in September to be cancelled as part of the so-called "Phase One" deal. The lack of any meaningful response by the U.S. side spurred fears of a new breakdown of negotiations.

Japan’s Nikkei 225 (+0.22%) nonetheless managed to cling onto persisting trade hopes, outperforming its peers and hitting a fresh 13-month high, also helped by a weaker yen and rising bond yields, which buoyed exporters and financials shares.

The 10-year yield climbed to its highest level in more than five months as an auction was met with weaker-than-expected demand amid a global debt sell-off. Technically, the yen is struggling with the 200 DMA, as it attempts to resume its rebound since August against the long-term downtrend.

Australia’s S&P/ASX 200 (-0.55%) underperformed.

h2 Global Financial Affairs/h2

Yesterday, U.S. stocks ended slightly off their record highs, while the market evaluated corporate profits and the broader economic outlook, with the elusive U.S.-China trade deal looming large in the background.