Here are the top five things you need to know in financial markets on Wednesday, July 13:
1. Theresa May set to take U.K. helm
The current British Home Secretary Theresa May will be sworn in as the new U.K. Prime Minister later on Wednesday, jump-starting a process that wasn’t expected to be completed until September 9.
Sterling was firmer on Wednesday, on track for its best performance in two months, as investors waited for the appointment with May expected to begin naming her ministers.
Most eyes will focus on the posterior naming of a so-called “Brexit czar” whose task will be to handle negotiations after the U.K.’s decision to leave the European Union.
2. Global stocks mixed as most rallies take a breather
Global stocks showed mixed trade on Wednesday, following a recent rally on strong U.S. economic data and the selection of a U.K. Prime Minister eased political uncertainty.
Asian shares came within reach of their 2016 highs on Wednesday and continued hopes for accommodative monetary policy fueled risk appetite.
European stocks were mostly lower on Wednesday, as investors were cautious ahead of the Bank of England’s policy meeting on Thursday, although easing concerns over U.K. political instability still lent support.
U.S. futures also pointed to a flat open on Wednesday, after both the Dow and S&P hit record highs in the prior session. At 9:57AM GMT, or 5:57AM ET, the blue-chip Dow futures edged forward 6 points, or 0.03%, S&P 500 futures inched up 2 points, or 0.07%, while the Nasdaq 100 futures advanced points, or 0.13%.
3. Fedspeak flow continues, market expectations little changed
The flow of remarks from Federal Reserve (Fed) officials was set to continue on Wednesday with market participants hoping to glean clues as to the overall stance of the U.S. central bank on the next step forward in monetary policy.
After the close on Tuesday, Minneapolis Fed chief Neel Kashkari commented that there is no urgency to raise rates due to low inflation, while Cleveland Fed president Loretta Mester repeated that it was still too early to judge the impact of the Brexit on the U.S. economy.
Both Dallas Fed president Robert Kaplan and Philadelphia Fed head Patrick Harker were scheduled for Q&As later on Wednesday.
Late Tuesday, Fed fund futures put the odds at 98.8% that the central bank would keep rates unchanged at the July 26-27 meeting, with the probability of a 25 basis point (bp) cut at 1.2%.
According to CME Group’s FedWatch Tool, markets put the odds of a rate hike at the December meeting at only 48.3%.
4. Sluggish signs from Japan and China
Japan’s government cut both inflation and growth forecasts for this year on Wednesday.
For 2017, the official forecast was placed at a 1.4% increase in consumer prices, highlighting the Bank of Japan’s (BoJ) difficulty in reaching its 2% inflation target.
The growth forecast for the world’s second largest economy was slashed to 0.9% in the current fiscal year, compared to January’s projection of 1.7%.
Over in China, the world’s second largest economy saw both exports and imports take a worse-than-expected tumble in June, underlining concern over global demand.
5. Oil trades lower on bearish bets for U.S. stockpiles
Oil prices pushed lower in European trade on Wednesday, amid speculation weekly supply data due later in the session will show U.S. crude inventories rose unexpectedly last week, increasing concerns over a supply glut.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. oil inventories rose by a surprising 2.2 million barrels in the week ended July 8, blowing away analysts who were looking for a 3 million barrel draw.
The U.S. Energy Information Administration will release its weekly report on oil supplies at 14:30GMT, or 10:30AM ET, Wednesday amid expectations for a drop of 2.95 million barrels.
U.S. crude oil futures lost 1.26% to $46.21, at 9:58AM GMT, or 5:58AM ET, while Brent oil fell 1.61% to $47.69.