Here are the top five things you need to know in financial markets on Wednesday, June 29:
1. U.K. PM refrains from invoking Article 50, pushing back EU departure
British Prime Minister David Cameron met with the European Council Tuesday but refrained from invoking Article 50, the treaty measure that would jump start the two year deadline for the U.K. to leave the European Union (EU), known as a Brexit.
European leaders had insisted that there would be no negotiations on new trade agreements until the U.K. moves ahead with Article 50.
Scotland’s First Minister Nicola Sturgeon will meet with the European Commission on Wednesday to discuss the Brexit.
Sturgeon insisted that Scotland, where 60% voted to remain in the EU, did not want to be ousted from the bloc by England.
2. Relief rally in global stocks continues
Global stocks recovered for a second day after the Brexit caused a record two-day devaluation of more than $3 trillion on both Friday and Monday.
Asian shares rose on Wednesday as immediate stress from the Brexit ebbed and market participants wagered that central banks would be able to keep the impact at bay.
European equities rose sharply higher on speculation that Article 50 will not be invoked for some time and hopes that the U.K. may be able to arrange a trade agreement to keep it in the single market.
U.S. futures also pointed to higher open on Wednesday, looking to continue what had been the strongest one-day move in four months in the previous session. At 9:57AM GMT, or 5:57AM ET, the blue-chip Dow futures gained 80 points, or 0.46%, S&P 500 futures rose 10 points, or 0.48%, while the Nasdaq 100 futures traded up 23 points, or 0.53%.
3. Powell is first Fed official to comment on Brexit risks after the vote
Federal Reserve (Fed) governor Jerome Powell became the first Fed official to comment on the Brexit after the market close on Tuesday, warning that it could pose a new drag on the U.S. economy at a time when momentum in the U.S. job market may already by slowing.
“The Brexit vote has the potential to create new headwinds for economies around the world, including our own,” Powell stated, adding that global risks had shifted to the downside.
Markets are convinced that Fed will not hike rates this year with Fed fund futures beginning to contemplate the possibility of a cut. The probability of 25 basis point reduction at the July meeting was at 4.8% late Tuesday.
4. Yellen’s favorite inflation indicator on deck
Investors looked ahead to data points to be released later in the U.S. session, including Fed chief Janet Yellen’s favorite inflation indicator, the core PCE price index for May.
The figure is expected to tick up just 0.2% on the month. With annualized rate forecast to show a 1.6% rise, the index remains below the Fed’s target of 2%, easing pressure to return to policy normalization.
Also at 12:30GMT, or 8:30AM ET, traders will eye May’s numbers on personal income and spending to gauge the health of the American consumer.
5. Oil prices continue recovery on expectations for supply draw
Oil prices pushed higher on Wednesday, extending overnight gains, 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.
The U.S. Energy Information Administration will release its weekly report on oil supplies at 14:30GMT, or 10:30AM ET, amid expectations for a drop of 2.4 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. oil inventories fell by 3.9 million barrels in the week ended June 24.
U.S. crude oil futures rose 1.07% to $48.36, at 9:59AM GMT, or 5:59AM ET, while Brent oil gained 0.87% to $49.69.