U.S. Stock Futures Slide, Yen Rises, Yuan Drops: Markets Wrap

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U.S. Stock Futures Slide, Yen Rises, Yuan Drops: Markets Wrap(Bloomberg) -- U.S. and Japanese stock futures slumped, China’s yuan dropped and the yen climbed in early trading Thursday after a report cast a cloud over recent optimism that at least a limited U.S.-China trade deal could come from high-level talks.Contracts on the S&P 500 Index tumbled as much as 1.3% after the South China Morning Post reported that no progress was made in deputy-level negotiations that precede the meeting of principals scheduled for Thursday. That’s a sharp reversal from the positive sentiment on Wall Street, where the S&P 500 closed up 0.9% on signs China was open to a partial deal. Crude oil fell below $52 a barrel and gold ticked higher on the newfound doubts about progress.Trade is front and center for investors, with Vice Premier Liu He leading a delegation slated to meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington. While the negotiations were officially scheduled to last two days, the South China Morning Post said Liu is planning to leave Washington Thursday.Tensions between the world’s largest economies have risen this month, with the U.S. putting a number of Chinese technology companies on a blacklist and reports showing the Trump administration is considering limiting American investment flows into China. A flap over the National Basketball Association has seen its sponsorship deals in China frozen.“What we’re seeing is the further degradation in trust between the two sides, and that is of course problematic to strike any sort of deal,” Stephanie Segal, a senior fellow at the Center for Strategic & International Studies in Washington, said on Bloomberg Television. “This is the question a lot of people are asking: what would be the thing that actually kind of resets the talks?”Meantime, traders of federal funds futures broadly maintained the amount of easing they expect from the Federal Reserve this year after Wednesday’s release of minutes from the latest meeting. They showed officials began debating how far their current interest-rate cutting campaign should extend even as they agreed to lower rates in response to growing risks to the U.S. economy.Here are some key events coming up this week:On Thursday, minutes from the European Central Bank’s most recent gathering are due.Chinese President Xi Jinping is scheduled to meet Indian Prime Minister Narendra Modi on Friday and Saturday for an informal summit.The U.S. releases a key measure of inflation on Thursday.Here are the main moves in markets:StocksFutures on the S&P 500 Index fell 1.2% as of 8:01 a.m. in Tokyo. The underlying gauge had risen 0.9% Wednesday.Futures on the Nikkei 225 Stock Average slid 1% in Chicago.CurrenciesThe yen jumped 0.4% to 107.09 per dollar.The offshore yuan fell 0.4% to 7.1634 per dollar.The euro was little changed at $1.984.BondsThe yield on 10-year Treasuries added five basis points to 1.58% on Wednesday.Treasury futures climbed.CommoditiesWest Texas Intermediate crude fell 1.5% to $51.80 a barrel.Gold rose 0.7% to $1,515.67 an ounce.\--With assistance from April Ma, Vildana Hajric and Robert Brand.To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.netTo contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Cormac Mullen, Andreea PapucFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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