Stocks Drift Ahead of Sunday Deadline on Tariffs -- Update

By Caitlin Ostroff 

Global stocks drifted Thursday as investors awaited developments on the China-U.S. trade talks ahead of a weekend deadline, as well as cues on the health of the European economy and the U.K.'s next steps on Brexit.

Futures linked to the Dow Jones Industrial Average were flat, as was the pan-continental Stoxx Europe 600 index.

Markets are in a holding pattern ahead of President Trump's decision on a fresh round of tariffs that are set to go into effect Sunday on roughly $156 billion of Chinese goods. The Wall Street Journal reported earlier this week that negotiators on both sides are working to delay the levies. The tariffs, which threaten to deepen China's economic problems and prompt retaliatory action, could also weigh on prices of cellphones, laptops and apparel for American consumers.

"People are just sort of trying to read the tea leaves of whether the relationship is improving," said Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management. The market may be too optimistic in its view that the tariffs will be pushed back, he said.

Later in the day, investors will get a sense of the approach European Central Bank President Christine Lagarde is likely to take in her new role when she holds her first public briefing following a rate-setting meeting. The ECB held interest rates at minus 0.5%.

On Wednesday, the U.S. central bank's policy makers indicated that they believe interest rates are low enough to stimulate growth in the world's largest economy as they opted to leave monetary policy unchanged. The outlook is "a favorable one," Chairman Jerome Powell said. The Fed's recent market interventions to keep short-term rates stable are also working, he said.

On a day of weak trading, the U.K.'s FTSE 100 stood as an outlier, gaining 0.5% as investors awaited the outcome of the general election.

Politicians in both the major political parties are signaling an end to years of constrained fiscal policy as the country prepares to exit from the European Union, and the vote results will play a crucial role in determining the course of Brexit. While a parliamentary majority for the Conservative Party is seen as most likely, recent polls have shown that Prime Minister Boris Johnson's lead has narrowed.

The British currency, which has rallied against the dollar in the past two weeks to surpass $1.32, fell 0.2% Thursday, with one pound buying $1.3167.

Write to Caitlin Ostroff at [e-mail]

(END) Dow Jones Newswires

December 12, 2019 08:32 ET (13:32 GMT)

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