Here are the top five things you need to know in financial markets on Wednesday, May 25:
1. Oil at a 7-month high climbs towards $50
Oil prices continued to scale positions in European trade on Wednesday, climbing to a fresh seven-month high amid speculation weekly supply data due later in the session will show U.S. crude inventories fell at a faster pace than expected last week.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. oil inventories fell by 5.2 million barrels in the week ended May 20, compared to expectations for a decline of 3.3 million barrels.
The U.S. Energy Information Administration will release its weekly report on oil supplies on Wednesday at 14:30GMT, or 10:30AM ET, amid expectations for a drop of 2.5 million barrels.
U.S. crude oil futures gained 1.07% to $49.14, at 9:56AM GMT, or 5:56AM ET, while Brent oil rose 1.05% to $49.12.
2. Greece gets $11.5 billion aid package; Greek bonds soar
Euro zone finance ministers agreed that Greece would receive €10.3 billion ($11.5 billion) in bailout funds in time to avoid financial peril this summer as debt payments come due.
Despite the fact that a plan for debt relief for Athens was pushed back to mid-2018, investors appeared to breathe a sigh of relief and poured into Greek bonds.
With the increased risk appetite, the Greece 10-Year fell to a six-month low on Wednesday, passing below the key 7% level that is generally considered to be the dividing line for debt sustainability.
3. China pushes yuan to 3-month low; plans to interrogate Fed on rate hike
China’s central bank sent the yuan to a three-month low against the dollar on Wednesday by setting the weakest reference rate in five years.
Specifically, the People's Bank of China (PBOC) set the USD/CNY reference rate at 6.5693, against Tuesday's fixing of 6.5468. The fixing was the weakest for the yuan since 2011.
Additionally, Chinese officials were planning to take advantage of the June 6-7 U.S.-China Strategic & Economic Dialogue to ask American counterparts about the odds for a rate increase next month, according to sources cited by Bloomberg.
China reportedly wished to prepare for the impact on financial markets and the yuan and preferred that tightening not occur until July.
4. Global stocks take Fed rate hike speculation in stride
Global stocks were broadly higher on Wednesday and returned to levels seen before hawkish minutes from the last meeting of the Federal Reserve (Fed) and aggressive comments from several U.S. central bank officials caused jitters world-wide.
With the exception of Chinese stocks, that slipped on growth concerns over the world’s second largest economy, Asian stocks rose with Japan and Australia closing with gains of 1.6% and 1.5%, respectively.
European stocks markets celebrated the agreement between Greece and its creditors and were up across the board. At 9:57AM GMT, or 5:57AM ET, the European benchmark Euro Stoxx 50 rose 1.56%, the DAX gained 1.53%, the CAC 40 traded up 1.19% while London's FTSE 100, held back by a YouGov survey suggesting that the opinions on whether to stay or leave the European Union were essentially balanced, advanced 0.77%.
In the U.S., futures pointed to a higher open on Wednesday after closing the prior session with one of the biggest gains of the year. The Dow Jones Industrial Average futures pointed to a 0.45% gain, S&P 500 futures rose 0.47%, while the Nasdaq 100 futures indicated a 0.57% rise.
5. Markets await more hints on Fed rate hike
Market players will pay close attention to comments from a number of Fed officials later in the day for further hints on the timing of a U.S. rate hike.
Philadelphia Fed president Patrick Harker speaks on the economy at an event in Philadelphia at 13:00GMT, or 9:00AM ET. Minneapolis Fed president Neel Kashkari is due to deliver comments at the Williston Basin Petroleum Conference in North Dakota at 15:40GMT, or 11:40AM ET, while Dallas Fed president Rob Kaplan speaks in Houston at 18:00GMT, or 14:00ET.
Besides the Fed speakers, traders will focus on an advanced read on international trade for April at 12:30GMT, or 8:30AM ET, FHFA home prices due at 13:00GMT, or 9:00AM ET, and Markit’s services purchasing managers’ index (PMI) at 13:45GMT, or 9:45AM ET.