LONDON: Stocks staged a cautious fight back on Thursday before a potentially tense meeting between US President Donald Trump and his Chinese counterpart Xi Jinping, the first between the two world leaders. US stocks were little changed in choppy trading on Thursday as investors reassessed their bets ahead of a potentially tense meeting between the two presidents and as the chances of quick fiscal stimulus ebbed.

At 9:44 a.m. ET the Dow Jones Industrial Average was up 3.09 points, or 0.01 per cent, at 20,651.24, the S&P 500 was up 0.46 points, or 0.01 per cent, at 2,353.41 and the Nasdaq Composite was up 5.54 points, or 0.09 per cent, at 5,870.01.

Five of the 11 major S&P sectors were lower. The S&P 500 financial index was down 0.3 per cent. Financial stocks have largely outperformed in a post-election rally, sparked by Trump’s pro-growth plans.

Risk appetite stabilised, having been soured by signs the Federal Reserve might start paring asset holdings later this year and that the chances of early US fiscal stimulus may be evaporating.

There was though encouragement from jobs market data as weekly jobless claims posted their largest drop in almost two years.

Europe’s big bourses were also starting to turn green, having been down almost 1 per cent earlier at one point and facing their worst day in over a month.

“I would say there is a general mood of caution although it would probably be too strong to say it’s risk off,” said Societe Generale strategist Alvin Tan.

“The reality is US equity markets have been going sideways for a while and Treasury yields have been trading towards the low end of the year’s range.” In the currency markets, the dollar was idling after a brief push, leaving the drama to the Czech crown which saw its biggest rise since 2011 as the central bank scrapped its long-held FX cap versus the euro.

Topping the agenda between Trump and Xi in Florida later will be whether Trump makes good on his threat to use US-China trade ties to pressure Beijing to do more to rein in its nuclear-armed neighbour North Korea.

Nerves were not helped when US Pacific Fleet Commander Admiral Scott Swift said any decision on a pre-emptive attack against North Korea would be up to Trump.

Lingering fears of a possible trade war had also kept Asian markets on edge. Hopes of near-term US fiscal stimulus were also bruised as US House of Representatives Speaker Paul Ryan said there was no consensus on tax reform and that it would take longer to accomplish than healthcare.

Whiplash

Europe’s pan-regional FTSEurofirst was almost back to flat but the overnight falls meant MSCI’s 46-country world index remained 0.2 per cent lower and on course for its fourth fall in five sessions.

Wall Street’s steady start came after the Dow posted its largest intra-day downside reversal in 14 months on Wednesday in reaction to the Fed.

Japan’s Nikkei then hit its lowest since early December overnight.

Australia’s index also lost 0.5 per cent. Shanghai made marginal gains but a private survey of China’s service sector showed activity expanded at its slowest pace in six months in March.

Comments from ECB head Mario Draghi that the euro zone still needed stimulus also nudged its yields back towards multi-week lows.

In commodity markets, oil ticked higher on track for a fourth consecutive daily gain, after recovering from losses triggered by record high US crude inventories. US crude was up 13 cents at $51.286 a barrel, while Brent made 20 cents to $54.56.