The surge in risk appetite spurred by soothing Federal Reserve comments and an easing of monetary policy in China lost some momentum on Monday, when U.S. equity futures pared an advance and European stocks drifted even as shares in Asia rallied. The dollar fell to the lowest in more than two months against peers.
XWhile contracts on the Dow Jones, S&P 500 and Nasdaq all still pointed to gains at the open they pulled back from the highs of the day. The Stoxx Europe 600 started in the green but erased the advance. In Asia, shares in Japan led a rally. Federal Reserve Chairman Jerome Powell said on Friday policy is flexible and officials are "listening carefully" to financial markets, while strong U.S. jobs data also lifted sentiment.
Treasuries edged up after a slide on Friday that sent yields soaring back to 2.67 percent. Fresh talks between the U.S. and China on trade and Powell's remarks helped sap demand for the greenback, while the pound slipped against the euro as U.K. lawmakers sought to avoid a no-deal Brexit.
Powell's remarks helped to lift sentiment that's been hammered as global equities posted their biggest annual loss since the financial crisis, easing concerns the Fed is determined to raise rates as global economic growth cools and markets tumble. But even after the slump in Treasuries at the end of last week, 10-year yields remain more than 50 basis points lower than where they peaked in November.
A further step by China's central bank late Friday to secure liquidity to the slowing economy may also help assuage concerns. Meanwhile, trade negotiations between the U.S. and China are restarting as the sides seek a deal before a 90-day truce expires.
Elsewhere, emerging-market shares jumped, and the Korean won, Malaysian ringgit and the Indonesian rupiah led gains in major currencies. West Texas Intermediate crude extended a recent rebound to trade close to $49 a barrel.
Here are some events investors may focus on this week:
A U.S. delegation is in Beijing for trade talks with Chinese officials, the first face-to-face encounter since Trump and Xi agreed to a temporary truce on Dec. 1. Wednesday sees the release of minutes from the Fed's Dec. 18-19 policy meeting. Powell will speak to the Economic Club of Washington D.C. on Thursday. U.K. Parliament resumes a debate on the Brexit withdrawal bill, with Prime Minister Theresa May seeking to avoid defeat in a vote set for the week of Jan. 14.
These are the main moves in markets:
Stocks
Futures on the S&P 500 Index increased 0.2 percent as of 8:23 a.m. London time, the highest in almost three weeks. The Stoxx Europe 600 Index climbed 0.1 percent to the highest in more than three weeks. The MSCI All-Country World Index gained 0.5 percent to the highest in three weeks. The MSCI Emerging Market Index advanced 1.2 percent to the highest in more than three weeks.
Currencies
The Bloomberg Dollar Spot Index dipped 0.3 percent to the lowest in almost 12 weeks. The euro advanced 0.4 percent to $1.1435. The Japanese yen jumped 0.4 percent to 108.13 per dollar. The British pound climbed 0.2 percent to $1.2747, the strongest in a week. The MSCI Emerging Markets Currency Index gained 0.3 percent to the highest in almost six months.
Bonds
The yield on 10-year Treasuries fell one basis point to 2.65 percent. Germany's 10-year yield decreased less than one basis point to 0.21 percent. Britain's 10-year yield dipped one basis point to 1.262 percent. The spread of Italy's 10-year bonds over Germany's fell two basis points to 2.6667 percentage points.
Commodities
The Bloomberg Commodity Index increased 0.4 percent to the highest in more than two weeks. West Texas Intermediate crude advanced 1.9 percent to $48.88 a barrel, hitting the highest in three weeks with its sixth consecutive advance. LME copper climbed 0.4 percent to $5,939.00 per metric ton, the highest in a week. Gold gained 0.4 percent to $1,291.69 an ounce.
