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Top 5 Things to Know in the Market on Wednesday

EconomyMay 23, 2018 05:57AM ET
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© Reuters. 5 key factors for the markets on Wednesday

Investing.com - Here are the top five things you need to know in financial markets on Wednesday, May 23:

1. Fed minutes in focus

The Federal Reserve will release the minutes of its most recent policy meeting at 2:00PM ET (18:00GMT) Wednesday, which may provide further insight into the conversation among policymakers ahead of their May 2 decision to keep interest rates unchanged.

The minutes will be monitored closely for the Fed's views on inflation and how that can affect the current rate-hiking path.

Investors have fully priced in a rate rise at the Fed's next policy meeting on June 12-13. However, Wall Street is divided over how many more time the central bank will raise interest rates after that.

The U.S. central bank currently forecasts two more rate hikes in 2018, although market expectations of a third move higher before the end of the year has been gaining momentum in recent weeks amid strengthening inflation prospects.

In other economic data scheduled for Wednesday, traders will also keep an eye on Markit’s preliminary reading of business activity for May at 9:45AM ET (13:45GMT) with April new home sales out just 15 minutes later.

2. Global stocks hit by geopolitical uncertainty

Global stocks continued under pressure on Wednesday as geopolitical uncertainty once again reared its head.

Wall Street ended lower on Tuesday after U.S. President Donald Trump said he was not pleased with recent U.S.-China trade talks that took place last week, dampening the positive sentiment seen since Treasury Secretary Steven Mnuchin announced over the weekend that the trade war was “on hold”.

Trump also raised doubts about whether the U.S.-North Korea summit would take place as planned on June 12 amid concerns that North Korean leader Kim Jong Un is resistant to giving up his nuclear weapons.

Reports that the President would seek to cut 10% of European steel exports to the United States also added to trade war fears amid expectations an EU-U.S. trade war would be far reaching expanding over multiple industries.

The selloff a day earlier on Wall Street spread to Asian shares on Wednesday, sending Japan’s Nikkei and China’s Shanghai Composite down 1.2% and 1.4%, respectively.

European stocks shared in market jitters on Wednesday, sliding more than 1%, with a string of negative economic data adding to the selloff in midday trade.

U.S. futures pointed to a lower open as trade concerns continued to weigh and markets awaited the Fed minutes and earnings from discount retailer Target (NYSE:TGT). At 5:52AM ET (9:52GMT), the blue-chip

Dow futures fell 188 points, or 0.76%, S&P 500 futures lost 18 points, or 0.67%, while the Nasdaq 100 futures traded down 69 points, or 1.00%.

3. UK inflation data sends cable to 2018 low

The pound hit a fresh five-month low against the dollar on Wednesday as a reading of annual inflation unexpectedly slowed to 2.4%, its lowest level since March 2017.

The low level of inflation may ease pressure on the Bank of England to move forward with policy tightening.

Although BoE governor Mark Carney testified to the UK Treasury Select Committee on Tuesday that the central bank expects interest rates to rise at a limited and gradual rate, traders remain split over whether there will be a rate hike in August.

By 5:53AM ET (9:53GMT), GBP/USD was off 0.59% at 1.3355.

4. Euro hits 5-month low against the dollar on weak private sector growth

The euro was near a five-month low after private sector growth in the euro zone fell to its slowest pace in 18 months in May.

The flash Euro zone composite output index, which measures the combined output of both the manufacturing and service sectors, registered a reading of 54.1 in May, compared to expectations for a reading of 55.0.

The weak report is likely to push back expectations that the European Central Bank will move forward with the removal of accommodative monetary policy.

EUR/USD fell 0.44% to 1.1727 as of 5:55AM ET (9:55GMT), near its lowest level since December.

5. Oil drops amid reports that OPEC considers output increase

Oil prices edged lower on Wednesday as reports that OPEC could increase output as soon as June weighed on sentiment and investors looked ahead to weekly U.S. inventory data.

Worries over Iranian and Venezuelan supply along with the fact that Washington raised concerns the oil rally was going too far may lead to an agreement to raise production, according to OPEC and oil industry sources cited by Reuters.

Meanwhile, market participants looked ahead to the U.S. Energy Information Administration’s release of its official weekly oil supplies report at 10:30AM ET (14:30GMT), amid forecasts for an oil-stock drop of 1.5 million barrels.

After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories declined by 1.3 million barrels last week.

U.S. crude oil futures fell 0.58% to $71.78 at 5:56AM ET (9:56GMT), while Brent oil gave up 0.83% to $78.91.

Top 5 Things to Know in the Market on Wednesday
 

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hareesh krishnaswamy
hareesh krishnaswamy May 23, 2018 6:40AM ET
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yes i am wonderful
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Ufik Mudiarto
Ufik Mudiarto May 23, 2018 6:11AM ET
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A clock 6. 00 am USDJPY markets
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Kathelyn Bean
Kathelyn Bean May 23, 2018 6:11AM ET
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How are you doing
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Kathelyn Bean
Kathelyn Bean May 23, 2018 6:11AM ET
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mohammad hosseini
mohammad hosseini May 23, 2018 6:11AM ET
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Kathelyn Bean The Dow Jones and S & P Index will have a climb wave this month. Possibly, today the pound will be strengthened
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