By Caitlin Ostroff 

U.S. stock futures and European equities fell Thursday following fresh concerns about the U.S.-China trade deal and the Federal Reserve's signals that it may pause interest-rate cuts.

Futures linked to the S&P 500 index dipped 0.3% and the pan-continental Stoxx Europe 600 gauge dropped 0.4%. Chinese officials have warned that they won't budge on some of the most difficult issues that need to be negotiated with the U.S., and expressed concerns that President Trump may back out of even the initial deal they hope to reach in coming weeks, according to Bloomberg.

The markets have underestimated the difficulty in negotiating a long-term deal between the two nations given the complexity of their links, according to Neil Dwane, global strategist at Allianz Global Investors.

"There are many, many facets to the changing relationship between the U.S. and China," Mr. Dwane said. "The trade issue is arguably the least important."

European stocks wavered earlier in the day as investors also took note of the Fed's policy statement, which signaled a higher hurdle for rate reductions after its third cut this year. The WSJ Dollar Index, which tracks the greenback against a basket of 16 currencies, fell 0.2% Thursday.

Assets considered to be a haven at times of uncertainty saw an uptick. Gold climbed 0.8% and government-bond prices rose. The yield on 10-year Treasurys fell to 1.738% from 1.801% Wednesday.

Early U.S. trading saw major moves in blue-chip stocks.

Facebook jumped 3.7% in offhours trading after the social-media giant's quarterly profit and sales exceeded Wall Street's expectations. Kraft Heinz Co. shares jumped 6.1% in premarket trading after the food company beat forecasts for its quarterly profit.

Starbucks climbed 2.5% after stronger U.S. sales of iced coffee and other cold drinks bolstered revenue in the latest quarter for the world's largest coffee chain. Apple ticked up 1.5% after it reported growth in gadgets and services that helped offset a decline in iPhone sales.

Shares of Western Digital dropped 7.5% before the opening bell after the data-storage device company swung to a loss in the latest quarter. Estée Lauder declined 3% after the cosmetics company scaled back its earnings guidance.

Over in Europe, Peugeot maker PSA Group was the worst performer, dropping 13.4% following its agreement to merge with Fiat Chrysler Automobiles in a deal that will create one of the world's largest auto makers by volume.

Fiat shares climbed 7.7% in Milan, while shares of rival Renault slumped 3.4%.

Royal Dutch Shell shares trimmed 3.1% after the oil giant expressed uncertainty over the pace of it completing its $25 billion share buyback, raising doubt over whether the program would be finished by the end of 2020.

Earlier Thursday, data showed Chinese manufacturing activity fell to an eight-month low in October, in another signal that the world's second-largest economy is under pressure from the trade tensions. The Shanghai Composite Index fell 0.4%.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

 

(END) Dow Jones Newswires

October 31, 2019 08:41 ET (12:41 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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