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Top 5 Things to Know in the Market on Wednesday

EconomyApr 04, 2018 05:30AM ET
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© Reuters. Top 5 things to know today in financial markets - Here are the top five things you need to know in financial markets on Wednesday, April 4:

1. China Announces Retaliatory Tariffs Against U.S. Goods

China hit back at the Trump administration's plan to slap tariffs on $50 billion in Chinese goods, retaliating with a list of similar duties on key U.S. imports, including soybeans, planes, cars, whiskey and chemicals.

Beijing's list of 25% additional tariffs on U.S. goods covers 106 items with a trade value matching the $50 billion targeted on Washington's list, China's commerce and finance ministries said.

The effective date will depend on when the U.S. action takes effect.

The move comes one day after the Trump administration pushed ahead with plans to slap tariffs on about $50 billion of Chinese industrial and hi-tech products, adding to market fears that world's two largest economies are spiraling towards a trade war that could shake the global economy.

2. U.S. Stock Futures Hit Hard As 'Trade War' Worries Escalate

U.S. stock futures pointed to sharp losses at the open, as appetite for riskier assets weakened amid worries that escalating U.S.-China trade tensions could deal a blow to the global economy and U.S. growth.

The blue-chip Dow futures plunged 425 points, or around 1.8%, the S&P 500 futures tumbled 37 points, or about 1.4%, while the tech-heavy Nasdaq 100 futures sank 124 points, or roughly 1.9%.

Of note, industrial companies with significant exposure to China were showing big losses in premarket action, with plane manufacturer Boeing (NYSE:BA) dropping as much as 6%, while heavy-machinery maker Caterpillar (NYSE:CAT) fell 4%.

Elsewhere, in Europe, the continent's major bourses declined in mid-morning trade, with most sectors trading in negative territory, as worries over a brewing trade war dented morale.

Earlier, in Asia, most of the bourses in the region closed mixed, as the overnight bounce on Wall Street stalled.

3. Dollar Slumps As China Hits Back At U.S.

The dollar slumped against the Japanese yen, as safe haven demand was boosted by escalating trade tensions after China announced countermeasures against the latest U.S. tariffs.

USD/JPY was down nearly 0.4% to 106.15, after sliding to an overnight low of 105.69.

The yen, typically viewed as a safe-haven currency, tends to be sought out by investors during times of political or economic uncertainty.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.2% to 89.69.

In the bond market, the U.S. 10-year Treasury yield inched down to 2.770%.

Looking ahead, the highlight of Wednesday's economic calendar will be the ADP jobs report at 8:15AM ET (1215GMT). Expectations are 208,000 private jobs were created in March.

An ISM survey on service sector activity for March is then due at 10:00AM ET (1400GMT), amid forecasts for a slight dip to 59.0.

4. U.S. Grain Prices Take A Nosedive

U.S. grain futures took a nosedive, with the price of soybeans and corn faring the worst, as investors fret over a slowdown in Chinese demand for U.S. agricultural goods in the wake of China's latest trade measure.

The Asian nation is one of the world's biggest importers of U.S. grains.

Soybean futures for May delivery fell 5.3% to $9.8350 a bushel on the Chicago Board of Trade.

Soy meal lost 3.8% to $365.30 a short ton, while soy oil declined 2.8% to 31.43 cents per ounce.

Meanwhile, corn futures were down 4.2% to $3.7225 a bushel.

5. Oil Prices Struggle Ahead Of EIA Supply Data

Oil traders looked ahead to fresh weekly data on U.S. commercial crude inventories to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise.

The U.S. Energy Information Administration will release its weekly report on oil supplies at 10:30AM ET (1430GMT), amid analyst expectations for a gain of 1.4 million barrels.

The American Petroleum Institute said late Tuesday that U.S. oil inventories fell by 3.3 million barrels in the week ended March 30. There are often sharp divergences between the API estimates and the official figures from EIA.

Oil prices were on the back foot, with New York-traded WTI crude futures sinking $1.20, or 1.9% to a two-week low of $62.30 per barrel, while Brent futures stumbled $1.26 to $66.86 per barrel.

Top 5 Things to Know in the Market on Wednesday

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