Investing.com - Here are the top five things you need to know in financial markets on Monday, October 23:
1. Nikkei logs record winning streak on Abe victory
Japan’s Nikkei 225 closed higher for a 15th straight day on Monday, marking its longest winning streak on record, after the Prime Minister Shinzo Abe’s ruling coalition maintained its super majority, paving the path for a continuation of ultra-easy policies.
European shares showed mixed trade on Monday with Spanish stocks leading losses as the ongoing political crisis with Catalonia kept investors on edge. The benchmark Euro Stoxx 50 was still up around 0.2%, though London’s FTSE 100 struggled near the unchanged mark as a profit warning from British car dealership Pendragon Plc (LON:PDG) made traders nervous over the state of the UK economy as the country continues negotiations over its departure from the European Union.
U.S. futures pointed to a slightly higher open on Monday as Wall Street ended last week near record highs and market participants braced for a busy week for earnings. No less than 186 S&P firms report quarterly results this week. At 5:58AM ET (9:58GMT), the blue-chip Dow futures gained 25 points, or 0.11%, S&P 500 futures edged forward 2 points, or 0.09%, while the Nasdaq 100 futures traded up 11 points, or 0.18%.
2. Trump keeps Yellen among 3 top candidates for Fed chair
U.S. President Donald Trump confirmed late Friday that Janet Yellen remains in the running as one of the candidates for the Federal Reserve chair position while also naming Stanford University economist John Taylor and Fed governor Jerome Powell among the lead candidates.
Trump told Fox Business Network that most people were focusing on Taylor and Powell, but noted that “I also met with Janet Yellen, who I like a lot, I really like her a lot.”
“So I have three people that I’m looking at, and there are a couple of others,” he said, adding that his decision will come shortly.
Trump is widely expected to make a formal announcement before he heads to Asia on November 3.
3. Dollar hits 3-month high vs. yen
The dollar touched a three-month high against the yen on Monday as traders speculated that Prime Minister Shinzo Abe’s sweeping victory would cement the continuation of loose economic policies.
The greenback hit 114.10 yen after the results, its strongest level since July 11, though USD/JPY had pared gains and was last up around 0.4% at 113.93 by 6:01AM ET (10:01GMT).
The dollar has found support as hopes for U.S. tax reforms were boosted last week after the Senate approved a budget measure that will allow Republicans to pursue tax cuts without Democratic support.
The greenback ended last week up 0.69%, its fifth weekly increase in six weeks. Investors expect a fiscal boost to push up inflation, which in turn to add pressure on the U.S. Federal Reserve to raise interest rates, known as the "Trumpflation" trade.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.31% at 93.86 by 6:01AM ET (10:01GMT).
4. Oil wavers despite bullish backdrop
Oil prices underwent volatility on Monday despite continuing supply concerns in the Middle East and signs of a slowdown in U.S. shale production.
Traders were focused on the fact that fighting between Iraqi government forces and Kurdish groups continued to weigh on oil flows.
Late Friday, Baker Hughes’ showed that active rigs in the U.S. fell by seven to 736 in the week to Oct. 20, the lowest level since June and a third straight week of declines.
U.S. crude oil futures inched up 0.06% to $51.87 at 6:02AM ET (10:02GMT), while Brent oil traded down 0.28% to $57.59.
Note: The contract for crude oil WTI rolled over on Sunday to December delivery.
5. Europe watches Spanish political tension ahead of ECB
Europe kept an eye on political developments between Spain and Catalonia on Monday as Madrid moved to remove the region’s autonomy.
The triggering of the so-called Article 155, a constitutional provision that allows the government to take direct control of a region if it is in breach of the law, came soon after Catalonia leader Carles Puigdemont suspended a declaration of independence and asked for talks with Madrid.
Investors continued to show caution with regard to not only Spanish equities, but also the euro which was down nearly 0.4% against the dollar on Monday.
That’s ahead of a key meeting by the European Central Bank on Thursday where president Mario Draghi could announce a tapering of the euro zone’s bond-buying program.