Here are the top five things you need to know in financial markets on Friday, May 20:
1. G7 meets to tackle stagnant global growth
Finance ministers and central bankers from the G7 began a two-meeting on Friday in Sendai, Japan meant to discuss ways of inflating sluggish global growth, though leaders were not expected to reach a pact on coordinated fiscal stimulus.
The risk of the U.K.’s June 23 referendum on its membership in the European Union will be a focal point on the agenda. Leaders are concerned about the impact on financial markets if Britain decided to leave, known as a Brexit.
2. Gold set for longest losing streak in 7 months
The yellow medal was heading for a third straight week of losses, its longest stretch since last November, as the Federal Reserve (Fed) signaled this week that a rate hike was on the table for June. Gold is sensitive to moves in U.S. rates, as a rise would lift the opportunity cost of holding non-yielding assets such as bullion.
The resurgent dollar, hovering at a seven-week high, also weighed on investor sentiment in commodities, as they become more expensive to buyers using other currencies.
3. Oil on track for a weekly gain of 5%
Oil prices traded flat on Friday but were headed to pocket gains of 5% for the week as supply disruptions from turmoil in Nigeria, the lowest output in the U.S. since September 2014, the continuing saga of wildfires in Canadian oil sands and the crisis in Venezuela led to hopes of a reduction in brimming inventories.
Market participants looked ahead to the U.S. oil rig count from oilfield services provider Baker Hughes. Last Friday, the data showed an eighth straight week of declines in the number of rigs drilling for oil in the U.S.
U.S. crude oil futures inched up 0.04% to $48.69, at 9:56AM GMT, or 5:56AM ET, while Brent oil slipped 0.08% to $48.77.
4. Global stocks rebound after Fed rate hike fears
Global stocks rebounded on Friday after the rout caused this week by the minutes from the last Fed meeting and comments from New York Fed president William Dudley and Richmond Fed chief Jeffrey Lacker all made abundantly clear that a rate hike as early as June could be appropriate.
Chinese stocks moved higher despite a fifth consecutive week of losses, while Japan managed to find some solace in a weaker yen.
European stocks markets also shook of the Fed-induced doldrums on Friday. At 9:57AM GMT, or 5:57AM ET, the European benchmark Euro Stoxx 50 rose 1.10%, the DAX gained 0.98%, the CAC 40 traded up 1.22% and London's FTSE 100 advanced 1.46%.
In the U.S., futures pointed to a higher open after the S&P entered the red for 2016 on Thursday. The Dow Jones Industrial Average futures pointed to a 0.30% gain, S&P 500 futures rose 0.27%, while the Nasdaq 100 futures indicated a 0.36% rise.
5. ECB on edge about further rate cuts
Though the monetary policy spotlight was on the Fed this week, European Central Bank (ECB) officials showed concern over the limits of their own extremely accommodative measures.
ECB member Jozef Makuch warned that continuing to cut rates could “bring about a totally counterproductive threat to financial stability”.
A couple members underlined the ECB’s stance to “wait and see”. ECB member Ando Hanson insisted on Friday that patience with monetary policy was warranted as it would take time for the measures to push through to the real economy.
ECB member Benoit Coeure also dismissed that the euro zone monetary authority currently had plans to move the deposit rate, already at -0.4%, further into negative territory.