➤ U.S.-China trade talks end without significant progress.
➤ Stimulus talk in focus as China inflation slows more than expected.
➤ Federal Reserve maintains dovish tone in meeting minutes.
Futures point to U.S. stocks opening in the red after four consecutive days of gains, as hopes of easing trade tensions between the U.S. and China appeared to fade.
Negotiators from China and the U.S. wrapped up their third day of ministerial talks yesterday in Beijing without a permanent deal on ending tit-for-tat tariffs on each other's exports. The U.S. Trade Representative's office said the talks focused on China's commitment to purchase a "substantial amount" of American products, while the Chinese Commerce Ministry said both parties had agreed to maintain close contact.
Experts say the Trump administration's hard-line approach to its ongoing trade spat with China has not paid significant dividends to this point, and the strategy could even continue to slow progress toward a reduced trade deficit as the countries intensify negotiations on a trade deal over the coming weeks.
Asian stocks largely closed lower, with Japan's Nikkei 225 index down 1.29% and the Shanghai SE Composite dipping 0.36%. Hong Kong's Hang Seng index edged 0.22% higher.
Data from China's statistics agency showed annual inflation slowing more than expected at the end of 2018, with the year-over-year rise in producer prices dropping sharply to 0.9% in December 2018 from 2.7% the previous month. The data is "the latest sign of cooling domestic demand and leaves policymakers with plenty of room to loosen policy," Capital Economics said in a note.
European equities followed their Asian peers lower, with the Euro Stoxx 50 index down 0.43% and the FTSE 100 slipping 0.18% as of 6:30 a.m. ET. Tesco PLC's shares gained 1.04% after the British supermarket operator affirmed its outlook for fiscal 2019 despite a dip in third-quarter sales. Shares in other British supermarket operators also rose, with Wm Morrison Supermarkets PLC up 1.20% and J Sainsbury PLC rising 1.47%.
Futures for the S&P 500 dipped 0.45%, while those for the Nasdaq 100 dropped 0.57% as support from the trade talks appeared to fade and as a partial U.S. government shutdown enters its 20th day. A prolonged shutdown could delay a number of high-profile IPOs and worsen an already significant backlog of at least 44 public offers awaiting the green light from the Securities and Exchange Commission.
In currencies, the dollar spot index gained 0.09% to 95.30, reversing earlier losses after minutes from the U.S. Federal Reserve's latest monetary policy meeting underlined the recent dovish tone among Fed officials who say the central bank can "afford to be patient" on further rate hikes as inflationary pressures remain muted amid growing uncertainties to the economic outlook.
Chicago Fed President Charles Evans yesterday highlighted the hazier outlook but said economic fundamentals remain sound, while Boston Fed President Eric Rosengren said the markets have been "unduly pessimistic" in recent days. Despite the significant dovish shift among Fed policymakers, the central bank is still expected to maintain its tightening bias, ABN Amro senior economist Bill Diviney wrote, adding that "the bar will be high" for the Fed to start cutting rates.
The euro dipped ticked down 0.03% versus the dollar before the European Central Bank releases the minutes of its last monetary policy meeting of 2018, while sterling fell 0.27% amid expectations that British Prime Minister Theresa May's proposed Brexit deal with the EU will be voted down in parliament next week.
Yields on 10-year U.S. Treasurys ticked down 1 basis point to 2.70%, while those on German Bunds with the same maturity dipped 2 basis points to just under 0.20%.
Brent crude oil retreated 0.80% to $60.95 per barrel on the ICE Futures Exchange after data from the U.S. Energy Information Administration showed that the draw in crude oil inventories was less than expected last week. Gold was up 0.22% to $1,294.90 per ounce.
More from S&P Global Market Intelligence:
Transparency, liquidity to be in focus in future European banking wind-downs
REITs in 2019: A tug-of-war between bulls and bears
Brokers could divert trades from NYSE, Nasdaq to jump-start new exchange
Subprime auto lender rides top-, bottom-line tailwinds into IPO market
Alto Metals' unique research model key in 'crucial' year for Sandstone project
The day ahead:
8:30 a.m. ET — U.S. jobless claims (Econoday consensus: 224,000)
8:35 a.m. ET — U.S. Fed's Tom Barkin speaks
10 a.m. ET — U.S. wholesale trade (Econoday consensus: .4% monthly)
10:30 a.m. ET — U.S. EIA natural gas report
12:40 p.m. ET — U.S. Fed's James Bullard speaks
12:45 p.m. ET — U.S. Fed Chair Jerome Powell speaks
1 p.m. ET — U.S. Fed's Charles Evans speaks
1:20 p.m. ET — U.S. Fed's Neel Kashkari speaks
4:30 p.m. ET — U.S. Fed balance sheet and money supply
6:30 p.m. ET — Japan household spending
7 p.m. ET — U.S. Fed's Richard Clarida speaks