US stocks have recovered some of their recent losses after China moved to stabilize its currency. But profits were drowned out as investors weighed on the prospects for corporate profits amid trade tensions between the world's two largest economies.
The S&P 500 rose 1% before deleting most of the advance as Citigroup Inc. warned that the conflict would continue long enough to recover corporate America's profits. The dollar is holding back and gold is holding near the six-year high, while China is pegging the yuan at more than $ 7, a level that triggered a global sell-off on Monday. The Treasury has returned part of yesterday's leap that created the most extreme inversion of the yield curve since the start of the 2008 financial crisis.
China's move to stabilize the yuan offered some reassurance that trade conflict between the world's two largest economies could be curtailed. But it came hours after the US designated the country a currency "manipulator", a move that could open the door to new sanctions in addition to the tariff increases already imposed on Chinese goods. China, for its part, said the recent depreciation of the yuan was decided by the market, not by Beijing, and denied the Trump administration's accusations.
"Everyone here is a poser and the implication is there is a great deal of geopolitical risk in this chess," said Matt Schreiber, president and chief investment strategist at WBI Investments. "Obviously, we have a political cycle in the run-up to the upcoming elections. This is a much deeper thrill than we think. "
Meanwhile, White House chief economic adviser Larry Kudlow said the US expects China to visit for more trade talks in September. Bloomberg reported that the Chinese National Bank has reassured a number of foreign exporters that the yuan will not continue to decline significantly and that companies' ability to buy and sell dollars will remain normal.
The Stoxx Europe 600 wiped off profits and dropped for the third consecutive day. The yen has slipped from its strongest closing rate in more than a year. The Asian stock index fell for the fifth session.
Elsewhere, the bitcoin went over $ 12,000 for the first time in three weeks before deleting its earnings. The pound has intensified as opponents of the unsuccessful Brexit have confirmed their plans to stop Prime Minister Boris Johnson from trying to leave the European Union without consent.
Here are some key events to watch for this week:
Revenues from financial giants include: UniCredit, AIG, ABN Amro Bank, Standard Bank, Japan Post Bank.
Central banks with interest rate decisions on Wednesday include India and New Zealand.
A number of Fed politicians speak this week, including St. Louis Chief James Bullard on Tuesday and Chicago's Charles Evans a day later. Both are voters of the Federal Open Market Committee.
Here are the main market movements (all sizes and ranges are closed):
The S&P 500 rose 0.3 percent to 11:32 a.m. New York.
The Stoxx Europe 600 index fell 0.4%.
The MSCI Asia-Pacific Index fell 0.7%, reaching its lowest level in almost seven months.
The Bloomberg Dollar Spot index was slightly changed.
The euro was slightly changed to $ 1,1202.
The British pound gained 0.1% to $ 1,221.
The Japanese yen sank 0.3 percent to 106.28 per dollar.
The pound yuan jumped 0.4% to $ 7.0203, the largest increase in six weeks.
Yields on 10-year funds rose three basis points to 1.73%, the first advance in more than a week.
The 10-year UK yield increased by one basis point to 0.52 percent.
Germany's 10-year yield fell two basis points to -0.54%, reaching its lowest level ever since its eighth consecutive decline.
Gold rose 0.4 percent to $ 1,469.97 an ounce to its highest level in more than six years.
West Texas' intermediate crude rose 0.3% to $ 54.82 a barrel.
– With the help of David Ingles, Cormac Mullen, Andrea Papuk and Laura Curtis.