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Top 5 Things to Know in The Market on Wednesday

EconomyJan 16, 2019 05:32AM ET
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© Reuters. - Here are the top five things you need to know in financial markets on Wednesday, January 16:

1. Brexit Drama Fallout

British Prime Minister Theresa May's government faces a no confidence vote after the crushing defeat of her Brexit divorce deal by parliament left Britain's exit from the European Union in disarray just 10 weeks before it is due to leave.

After parliament voted 432-202 against her deal, the worst defeat in modern British history, opposition Labour Party leader Jeremy Corbyn promptly called a vote of no confidence in May's government, to be held at 2:00PM ET (19:00 GMT).

Many investors expect May to survive and to subsequently pursue delaying the planned March 29 deadline for when the U.K. is supposed to officially leave the European Union.

The British pound firmed up following a plunge overnight. GBP/USD was at 1.2875 by 5:30AM ET (10:30 GMT) after falling as low as 1.2667 late Tuesday.

Read more: Brexit Update: What Just Happened And What's Next?: Pauline Thomas

2. Global Stocks Weather Brexit Debacle

Global stock markets weathered a U.K. political storm as investors bet that a disruptive no-deal Brexit was less likely after British lawmakers overwhelmingly defeated May's Brexit divorce deal.

Asian shares ended mostly higher, with Australian shares hitting two-month highs and South Korea's Kospi and Hong Kong's Hang Seng reaching six-week tops.

Markets in Europe were also higher, though British shares underperformed, with the FTSE down around 0.5%, as the stronger pound pushed multinationals like Unilever (LON:ULVR) and Diageo (LON:DGE) lower.

On Wall Street, U.S. stock futures pointed to a slightly higher open, as investors looked ahead to the latest batch bank earnings.

The blue-chip Dow futures were up 66 points, or around 0.3%, the S&P 500 futures rose 6 points, or about 0.2%, while the tech-heavy Nasdaq 100 futures indicated a gain of 2 points, or less than 0.1%.

The moves in premarket come after U.S. stocks rallied on Tuesday, as strong gains in Netflix (NASDAQ:NFLX) led technology and internet stocks higher.

3. Bank of America, Goldman Sachs Report Earnings

Earnings from Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) will be today's main event, as a busy week for earnings rolls along.

Bank of America is slated to publish fourth-quarter results at 6:55AM ET (11:55 GMT). Analysts are forecasting earnings per share (EPS) of $0.63 on revenue of $22.36 billion. The same period of last year had $0.48 in EPS and $24.04 billion in revenue.

Goldman Sachs is set to follow with its Q4 report at 7:35AM ET (12:35 GMT). Wall Street analysts expect the firm to post EPS of $4.42, down from $5.68 a year ago, and revenue of $7.59 billion.

Also on the earnings docket for today are Blackrock (NYSE:BLK), Bank of New York Mellon (NYSE:BK), and PNC Financial Services (NYSE:PNC), all set to post results in the morning, while Alcoa (NYSE:AA) is due after the close along with CSX (NASDAQ:CSX) and Kinder Morgan (NYSE:KMI).

4. Fed's Beige Book in Focus

Despite the ongoing U.S. government shutdown, the Federal Reserve will release its Beige Book at 2:00 PM ET (19:00 GMT).

The Beige Book reports on various local economic conditions and will be an input to the upcoming Federal Open Market Committee meeting at the end of the month.

After the Fed hiked rates four times in 2018, investors now expect the U.S. central bank to halt its monetary tightening policy this year as risks to the U.S. economy mount.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was a shade lower at 95.58.

In the bond market, U.S. Treasury yields inched higher, with the benchmark 10-year note standing at 2.73%, while the yield on U.S. government bonds with 2-year maturities was at 2.54%.

5. EIA's Weekly Oil Supply Report

In commodity markets, the U.S. Energy Information Administration will release its official weekly oil supplies report for the week ended Jan. 11 at 10:30AM ET (15:30 GMT).

Analysts expect the EIA to report a drop of around 1.3 million barrels in crude supplies. If confirmed, it would be the second straight weekly decline in domestic oil inventories.

The American Petroleum Institute (API) said on Tuesday that U.S. crude inventories dropped by 560,000 barrels last week.

U.S. West Texas Intermediate crude futures were down 17 cents, or 0.3%, at $51.94 a barrel, while international Brent crude oil futures dipped 2 cents to $60.62 per barrel.

-- Reuters contributed to this report

Top 5 Things to Know in The Market on Wednesday

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