US stocks decline on US-China deal but Brexit chances falter

US stocks finished lower on the back of Washington and Beijing agreeing to a limited trade deal. That followed gains for Asian equities, but declines for European shares — and the British pound — after two days of Brexit talks ended without a breakthrough.

The S&P 500 ended 0.1 per cent lower, having flicked between small gains and losses all day. The Nasdaq Composite dropped 0.1 per cent. The US bond market was closed for Columbus Day.

Europe’s benchmark Stoxx 600 dropped 0.5 per cent and the FTSE 100 fell 0.5 per cent on Monday. Michel Barnier, EU chief Brexit negotiator, said Boris Johnson’s deal was complex and needed more time, casting doubt on last week’s optimism which had resulted in a late surge for the pound. Officials say talks, which are continuing into Monday, offer “one last chance” to solve the Irish border question.

Sterling was 0.7 per cent weaker against the dollar on Monday, while the yield on the UK 10-year gilt trimmed earlier declines to be 1.2 basis points lower at 0.628 per cent.

In the commodities market, Brent crude, the global oil benchmark, fell 2.2 per cent, while West Texas Intermediate, the US crude benchmark, shed 2.3 per cent.

In China, the CSI 300 of Shanghai- and Shenzhen-listed stocks rose 1.1 per cent to a one-month high and Hong Kong’s Hang Seng was up 0.8 per cent. South Korea’s Kospi strengthened 1.1 per cent as Samsung Electronics jumped 1.7 per cent to its highest in 16 months, over how a cool-down in trade tensions could support technology supply chains. Japanese markets were closed for a public holiday.

President Donald Trump described the accord, which will see the US hold off on tariff increases planned for this week, as a “substantial phase one deal”. Officials from both countries are expected to finalise the agreement ahead of a possible summit between Mr Trump and Chinese president Xi Jinping next month. 

The onshore-traded Chinese currency strengthened 0.3 per cent to Rmb7.0658 to the dollar, a one-month high.

Economists from Citi noted the Chinese statement appeared to be “cautious and subdued” and did not characterise this round of talks as a “phase one deal” and did not mention the plan to purchase US agricultural goods.

“The implementation on this partial deal can’t be verified based on published documents. Thus, implementation will be at the mercy of goodwill from both sides,” they wrote on Monday.

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Markets Briefing is a concise look at global markets, updated throughout the trading day by Financial Times journalists in Hong Kong, New York and London. Feedback? Write in the comments below or send us an email.

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