The Short Version
Markets started the overnight session strong and even added to gains into EU close with the S&P 500 hitting 2814 before pulling back significantly. The largest index in the world closed below the critical 2800 level sparking fresh concerns that the recent rally has already priced in the developments.
The Long Version
In European Equity Markets the pan-European Stoxx 600 finished up 0.29 percent. Autos were the clear top-leading sector, up more than 2.1 percent, as trade talks between the U.S. and China take center stage. The sector is highly influenced by developments in global trade. Persimmon fell near the bottom of the index, down by more than 4 percent. This is after the U.K. government reviewed the house builder participation in the Help to Buy Scheme, a government program aimed at supporting purchases of first homes, and said that it was "increasingly concerned" by the firm's practices.
In Currency Markets the safe-haven dollar and yen slipped on Monday as risk appetite increased after U.S. President Donald Trump said he would delay a planned hike in tariffs on Chinese imports, suggesting trade negotiations between the two countries have made significant progress. The Australian dollar, seen as a proxy for China risk because of Australia’s dependence on Chinese demand for its exports, rose 0.7 percent to US$0.7176. The New Zealand dollar gained 0.6 percent to US$0.6894.
In Commodities Markets oil fell by more than 2 percent on Monday, reversing earlier gains after U.S. President Donald Trump told OPEC producers to “relax” as prices were too high. Brent crude oil futures were down $1.43 at $65.69 a barrel, having earlier risen to a 2019 high of $67.47. West Texas Intermediate (WTI) crude futures were down $1.38 at $55.88 a barrel. Members of the OPEC together with non-OPEC producers such as Russia have agreed to cut production by 1.2 million barrels per day this year to help balance the market and support prices.
In US Markets, oil dropped significantly after Trump blamed the OPEC Bloc for higher prices in recent weeks. Banks were heavily sold off later in the afternoon. Markets were initially euphoric and turned fearful towards the close.
In Bond Markets U.S. Treasury yields rose on Monday as investors reduced their existing holdings to make room for a wave of supply and traders rolled back their safe-haven positions after U.S. President Donald Trump postponed an increase in tariffs on China. The yield on benchmark 10-year Treasury notes was up 2.2 basis points at 2.6770 percent. Two-year Treasury notes were up 1.9 basis points at 2.5099 percent.