UKX FTSE 100 Index

By Avantika Chilkoti 

Stocks wavered Wednesday ahead of new U.S. trade data that could provide clues on the impact of the U.S.-China trade dispute and the sustainability of growth in the world's largest economy.

In Europe, the Stoxx Europe 600 was broadly flat in morning trading. Futures pointed to small opening drops in the U.S. of 0.2% for both the Dow Jones Industrial Average and the S&P 500.

In Asia, Chinese stocks led markets higher on hopes for new stimulus measures. The Shanghai Stock Exchange was up 1.6%, Hong Kong's Hang Seng Index gained 0.3% and Japan's Nikkei was down 0.6%.

Investors will watch closely as official trade data from the U.S. is published later Wednesday. Economists surveyed by The Wall Street Journal forecast the trade deficit widened to $56.9 billion in December.

Peter Heilbron, senior investment officer at Northern Trust Wealth Management, said U.S. data has been a "mixed bag" of late as the effects of President Trump's tax policies fade. But investors' outlook on the U.S. has been buoyed in 2019 by signals that the Federal Reserve will hold off from hurriedly tightening monetary policy.

While many analysts have praised the central bank's patience, Mr. Heilbron flagged concerns that the economy could "overheat" with such accommodative policy, and said, "Does that virtue turn into vice as we move forward?"

Wednesday's discussions on trade will be followed by fresh signals on the health of the U.S. economy later this week as the Labor Department releases new figures on worker productivity Wednesday and its jobs report Friday.

Economists surveyed by the Journal expect productivity grew at a slower 1.7% pace in the fourth quarter of 2018, and predict the economy added 185,000 to payrolls while the unemployment rate nudged down to 3.9% in February.

Reports have suggested China and the U.S. are in the final stages of completing a trade deal. Still, there are signs that talks are stuck on the particulars of an agreement and investors are wary that the rivalry between the world's two largest economies could continue.

"It is hard to say when and how it is going to be resolved because obviously it's not just about simple things related to cars and things like that, it's more about intellectual property," said Anna Stupnytska, global economist at Fidelity International.

The WSJ Dollar Index, which tracks the greenback against a basket of 16 currencies, was up 0.1% Wednesday.

The 10-year U.S. Treasury edged down to 2.711% from 2.722% Tuesday. Yields move inversely to prices.

Meanwhile, in Europe, the Brexit negotiations drag on with just weeks to go before the deadline for the U.K. to leave the bloc. Barclays analysts have flagged concerns that the political uncertainty around Brexit is weighing on employment in the U.K.

"With services businesses delaying hiring and manufacturers even cutting jobs, we expect households will increasingly be tempted to change consumption patterns and become more cautious in the face of job insecurity," the analysts wrote in a recent note to clients.

The British pound was down 0.2% against the dollar and the euro Tuesday. The FTSE 100 index, which is dominated by large international businesses, gained 0.1%.

Markets were awaiting a meeting of the European Central Bank's governing council later this week against a backdrop of slowing growth across the region.

In commodities, global benchmark Brent crude oil was down 0.3% at $65.65 a barrel.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com

(END) Dow Jones Newswires

March 06, 2019 06:14 ET (11:14 GMT)

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