Investing.com - Here are the top five things you need to know in financial markets on Monday, May 23:
1. Oil prices slump as global production outages near end
Oil prices were under pressure on Monday, giving back some of last week’s gains amid easing concerns over global supply outages.
U.S. crude was down 40 cents, or 0.83%, to $48.01 a barrel by 9:55GMT, or 5:55AM ET, while Brent dropped 31 cents, or 0.66%, at $48.40.
Oil futures have been well-supported in recent weeks due to a combination of Nigerian, Libyan and Venezuelan supply outages, as well as reduced production of Canadian crude as a result of fires in Alberta's oil sands region. However, as some of the supply disruptions are subsiding, traders are putting their focus back on the growth of global oil supply.
2. U.S. dollar holds near 2-month highs on rate hike bets
The U.S. dollar held at its highest level in nearly two months against a basket of major currencies on Monday as markets continued to factor in the possibility of another interest rate hike by the Federal Reserve as early as June.
The dollar index, which tracks the greenback against a basket of six rival currencies, was little changed at 95.30, remaining within striking distance of last week’s two-month peak of 95.52.
More Fed officials are due to speak later on Monday, including St. Louis Fed President James Bullard, San Francisco Fed President John Williams and Philadelphia Fed President Patrick Harker.
3. Euro zone private sector growth slows to 16-month low
Economic activity in the euro zone fell to a 16-month low in May, underlining concerns over the health of the region's economy, preliminary data showed on Monday.
The preliminary reading of the euro zone composite purchasing managers’ index, which measures the combined output of both the manufacturing and service sectors, ticked down to a 16-month low of 52.9 from 53.0 in April.
The slowdown in economic activity highlighted the challenges facing the European Central Bank in its attempts to spur growth and inflation in the region.
4. Japan gets hit with weak trade data, PMI
Data released earlier showed that Japan posted a much larger-than-forecast trade surplus in April as exports fell at the fastest rate in three months.
The Asian nation’s trade surplus for April came in at ¥823.5 billion, far above forecasts for ¥493 billion. Exports declined 10.1% on a year-over-year basis, while imports fell 23.3%, pointing to weakening domestic demand.
A separate report showed that Japanese factory activity contracted at the fastest pace in over three years in May as new orders fell.
The downbeat data added to pressure on the Bank of Japan to step up measures to spur growth.
5. Bayer makes $62 billion offer for Monsanto
German drugs and chemicals group Bayer AG (DE:BAYGN) said it had made an offer to buy U.S. seeds company Monsanto Company (NYSE:MON) for $122 per share in cash, or a total value of $62 billion including debt, to create the world's biggest agricultural supplier.
Bayer said it planned to finance the deal with a combination of debt and equity, primarily via a rights offering. Equity would account for about a quarter of the deal value.
Bayer shares lost almost 3% in Frankfurt, while shares in Monsanto were indicated nearly 10% higher in pre-market trade on Wall Street.