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● Markets adopt cautious tone ahead of key data and Trump-Xi meeting
● US equity futures dip, China rallies and European stocks a tad firmer
● US 10-year Treasury stalled at 2.35 per cent, while gold holds above $,1250
● Dollar index steady at 100.5 amid meek moves for the euro, yen and sterling
● Oil prices extend their rally, pushing Brent to a four week high

Markets are trading tentatively as the health of the world’s biggest economy, the prospect for global benchmark borrowing costs, and the US relationship with China dominate investor thinking.

S&P 500 futures suggest a 3 point dip to 2,357 for Wall Street’s stock barometer when trading gets under way later in New York.

The dollar index, which measures the buck against a basket of its peers, is barely changed at 100.52 and benchmark 10-year Treasury yields, which move opposite to the bond price, are just a fraction of a basis point firmer at 2.35 per cent.

The rangebound action reflects a reluctance to make bold bets ahead of a number of risky events in coming days.

A survey of US private sector job hiring will be published by ADP at 13:15 BST and traders will be keen to see if the health of the labour market dovetails with the Federal Reserve’s thinking when the central bank publishes at 19:00 BST the minutes of its latest meeting. The official non-farm payrolls report will be released on Friday.

Sandwiched between the jobs data is the start on Thursday in Florida of an eagerly-anticipated summit between the presidents of the US and China.

The relationship between the world’s two biggest economies is quite tense as the Trump administration complains about China’s large trade surplus and Washington makes clear its frustration at Beijing’s alleged unwillingness to tackle continued provocations by North Korea.

Investors are wary that if the Trump-Xi summit is seen to have not gone well then it would make it more difficult to reach agreement on North Korea, while any lingering trade friction could damage corporate profits.

Equities
Still, mainland China’s equities shrugged off such concerns. The Shanghai Composite, returning to action after taking the first two days of the week off, rose 1.4 per cent as traders were energised by news that Beijing would launch a big new economic zone in Hebei province, sending related shares surging.

Bourses elsewhere are displaying more caution. In Europe, the Stoxx 600 is unchanged and London’s FTSE 100 is up 0.3 per cent per cent as miners welcome an overnight rise in copper prices.

Hong Kong’s Hang Seng lost 0.2 per cent, Japan’s Topix was flat, while in Australia the S&P/ASX 200 was up 0.3 per cent on solid gains for the materials and energy sectors.
South Korea’s Kospi Composite recovered early losses that came in the wake of North Korea firing another missile into the Sea of Japan on Wednesday morning, the index finishing barely changed on the session.

Commodities
Oil prices continue to advance, having enjoyed a 2 per cent bounce on Tuesday as investors weighed up whether Opec members might extend supply curbs beyond an initially agreed six-month period.

Brent crude, the international benchmark, is up 0.5 per cent to $54.48 a barrel, while West Texas Intermediate, the main US contract, is adding 0.6 per cent to $51.34.
Gold is unchanged at $1,255 an ounce, having gained over the previous three sessions as global investors adopted a more cautious stance ahead of the week’s risk events.

Copyright The Financial Times Limited 2017. All rights reserved.
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