Wall Street ended in the red having spent most of Monday fluctuating between losses and gains as investors refocused on US-China trade tensions ahead of a meeting between the two countries later this week.
The S&P 500 shed 0.5 per cent with communications services the only major sector in the black, while energy was the biggest loser with a decline of 0.9 per cent. Meanwhile the Nasdaq Composite ended 0.3 per cent lower. Both indices had come off their lows to trade as much as 0.3 and 0.4 per cent higher respectively, but failed to hold on to those gains.
Treasuries sold off with the yield on the US 10-year up 4.4 basis points to 1.5580 per cent, while that on the two-year was up 6.6 basis points to 1.4638 per cent. Yields move inversely to price.
The choppy moves in equities came amid reports the Chinese Commerce Ministry is prepared to a deal with the US on parts of negotiations both sides agree upon, and that they are prepared to set out a timetable for harder issues to be worked out next year.
Stocks had come under pressure earlier in the day following a report Beijing is reluctant to agree to a broad deal with Washington and that the scope of topics for any potential agreement have narrowed considerably in recent weeks. Trade negotiators from both sides are set to resume talks in the US capital from October 10.
“The US has indicated that it wants a broad-based deal. Nothing is yet in the bag, and optimism on trade has proved time and again to be misplaced,” wrote economists at ING.
Investors will also watch speeches from central bankers that include the Federal Reserve’s Jay Powell and Bank of England’s Mark Carney for further insight into the direction of monetary policy. Relatively soft non-farm payrolls at the end of last week have reinforced market expectations for imminent US interest rate cuts, Rabobank said.
The Stoxx Europe 600 reversed early losses to end 0.7 per cent higher by late morning on Monday. On an otherwise quiet day for economic data, figures showed German industrial orders have continued their decline, dropping by 0.6 per cent in August from the previous month.
Elsewhere in markets, the Turkish lira took a beating after Donald Trump threatened to “obliterate” Turkey’s economy.
Elsewhere in Asia, Japan’s benchmark Topix was flat, while equity markets in Hong Kong, which was rocked by further political unrest over the weekend, and mainland China remained closed for a holiday.
Sterling was down 0.3 per cent at the $1.2297 mark, as markets digested the likelihood of the UK and EU agreeing a Brexit deal. Boris Johnson on Sunday urged the EU to compromise on a Brexit deal, as he insisted the UK would leave the bloc without an agreement if necessary on October 31.
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