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Top 5 Things to Know in the Market on Friday

Published 15/06/2018, 10:51
Updated 15/06/2018, 11:18
© Reuters.  5 key factors for the markets on Friday

© Reuters. 5 key factors for the markets on Friday

Investing.com - Here are the top five things you need to know in financial markets on Friday, June 15:

1. Trade tensions in focus as Trump prepares more tariffs for China

China vowed on Friday to strike back quickly if the United States hurts its interests, hours before U.S. President Donald Trump was due to unveil revisions to a tariff list targeting $50 billion worth of Chinese goods.

Washington and Beijing appeared increasingly to be headed toward a trade war after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policy, market access and a $375 billion trade gap.

"If the United States takes unilateral, protectionist measures, harming China's interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights," Chinese Foreign Ministry spokesman Geng Shuang told a regular daily news briefing.

Trump was due to give details later on Friday of a revised list of 800 product categories, down from 1,300, according to an administration official and an industry source familiar with the list.

The tariffs would raise the prospect of a global trade war as the United States' other trading partners such as the EU and Canada have recently vowed to retaliate with countermeasures to the U.S.'s tariffs on imported steel and aluminum.

The tensions kept investors on edge, with U.S. futures pointing to a lower open. At 5:48AM ET (9:48GMT), the blue-chip Dow futures fell 132 points, or 0.52%, S&P 500 futures lost 11 points, or 0.39%, while the Nasdaq 100 futures traded down 16 points, or 0.21%.

2. Data downpour to round off the week

A regional U.S. manufacturing report, consumer sentiment and industrial production will round off this week's release of top-tier economic data.

Michigan’s consumer expectations index, due 10:00AM ET (14:00GMT), is expected to show a preliminary reading of 89.7 for June, while consumer sentiment is forecast to show a preliminary reading of 98.5 for June, up from a reading of 98 last month.

The New York Fed’s Empire State manufacturing index at 08:30AM ET (12:30GMT) – a gauge of New York-area manufacturing – is expected to show a drop in June compared to the previous month.

Meanwhile, industrial production is forecast to have edged forward 0.2% in May in what would be its fourth consecutive month of expansion.

The reports could further strengthen the narrative of a strong U.S. economy, which Fed chairman Powell said was in "great shape" during a press conference earlier this week.

3. Euro headed for biggest weekly decline in 19 months

The euro on Friday was headed for its worst weekly loss in 19 months after a cautious European Central Bank signaled it will keep interest rates at record lows well into next year.

“The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path," the ECB said in its policy decision released on Thursday.

Reiterating that point in the press conference’s question and answer period, ECB president Mario Draghi stressed the “at least through the summer of 2019” and added that “we did not discuss if and when to raise rates.”

Although the euro was recovering some lost territory against the dollar on Friday, moving back above the $1.16 handle, the single currency was on track for weekly losses of 1.4%.

4. Oil heads lower with U.S. production on tap

Oil prices headed lower on Friday as market participants awaited the weekly installment of U.S. drilling activity.

Baker Hughes’ data showed last week that U.S. drillers added one oil rig last week, bringing the total count to 862, the highest number since March 2015.

That added to concern on the supply side even as U.S. oil output jumped to a record 10.9 million bpd, according to the Energy Information Administration’s report released Wednesday.

Traders are also on edge over global supply after Saudi Arabia and Russia indicated that Organization of the Petroleum Exporting Countries could vote to increase oil production at its meeting next week.

OPEC and non-OPEC producers led by Russia are set to meet in Vienna on June 22 and where they will decide whether or not to increase supply by one million barrels per day to replace output faltering in Venezuela and Iran.

U.S. crude oil futures traded down 0.16% to $66.78 at 5:50AM ET (9:50GMT), while Brent oil fell 0.83% to $75.31.

5. BoJ goes against central bank trend, holds steady on lower inflation outlook

The Bank of Japan on Friday downgraded its view on inflation in a fresh blow to its long-held 2% price goal, giving the central bank barely any room to maneuver as it tries to map a path to roll back its crisis-era stimulus.

As widely expected, the BOJ maintained its ultra-loose monetary policy, keeping its short-term interest rate target at minus 0.1% and a pledge to guide 10-year government bond yields around 0%.

The move contrasts with the European Central Bank's decision to end its asset-purchase program this year and the U.S. Federal Reserve's steady rate increases, which signaled a break from policies deployed to battle the 2007-2009 financial crisis.

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