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Top 5 Things To Know In The Market On Tuesday

Published 08/05/2018, 10:27
Updated 08/05/2018, 10:52
© Reuters.  Top 5 things to know today in financial markets

© Reuters. Top 5 things to know today in financial markets

Investing.com - Here are the top five things you need to know in financial markets on Tuesday, May 8:

1. Markets Brace For Trump's Decision On Iran

Investors waited on an announcement by President Donald Trump on whether the United States will pull out of the 2015 international nuclear deal and reinstate sanctions against Iran.

Trump will announce his decision, which comes four days earlier than the May 12 deadline, from the White House at 2:00PM ET (1800GMT).

A senior U.S. official said it was unclear if efforts by European allies to address Trump's concerns would be enough to save the pact, but European diplomats said privately they expected Trump to effectively withdraw from the agreement.

Should Trump pull the U.S. out of the agreement, Iranian crude exports could be hit, adding to tightness in the oil market.

Iran, which is a major Middle East oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC), resumed its role as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran's nuclear program.

2. Oil Prices Lose Steam

After oil prices climbed to fresh three-and-a-half-year highs on Monday, the energy market pared back its gains ahead of Trump's decision on the future of the Iran nuclear deal.

New York-traded WTI crude futures slumped 92 cents, or around 1.3%, to $69.81 a barrel, pulling back from Monday's peak of $70.84, a level not seen since November 2014.

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., declined 80 cents, or 1.1%, to $75.38 a barrel, after climbing to $76.34 in the last session, its highest since November 2014.

Market analysts said the fall in prices was akin to "buy the rumor, sell the news" kind of behavior for markets, which had initially expected a statement from Trump only later in the week.

Investors will also focus on fresh data on U.S. commercial crude inventories to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise.

Industry group the American Petroleum Institute is due to release its weekly report at 4:30PM ET (2030GMT), amid forecasts for an oil-stock drop of around 1.1 million barrels.

3. Dollar Rises To Fresh 2018 High… Again

The dollar ticked higher against a basket of currencies, reaching a fresh 2018 peak amid indications that the U.S. economy remains on track, leaving the Federal Reserve on pace to raise benchmark interest rates further this year.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up around 0.2% at 92.82, after touching a session peak of 92.90, its strongest level since late December.

Demand for the dollar lately has been underpinned by bets that the Federal Reserve will continue raising rates while other central banks, including the European Central Bank and the Bank of England, will act more slowly as recent economic figures there suggest cooling momentum.

The euro remained on the back foot against the dollar, one day after falling below the 1.19-level for the first time this year. The common currency last changed hands at 1.1885, which was the weakest level in four months.

Meanwhile, the British pound traded at 1.3510, within sight of its four-month low of 1.3487 touched last week.

Fed Chairman Jerome Powell said early Tuesday at an event in Switzerland that financial markets have gotten the message on the U.S. central bank’s plan for gradual interest-rate increases and “should not be surprised” by its actions.

The Fed 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.

4. U.S. Stock Futures Point To Lower Open

U.S. stock futures pointed to a lower open, with markets looking set to extend a late-session selloff seen on Monday.

The blue-chip Dow futures slipped 60 points, or about 0.3%, the S&P 500 futures fell 8 points, or 0.3%, while the tech-heavy Nasdaq 100 futures indicated a loss of 18 points, or roughly 0.3%.

U.S. stock benchmarks finished higher on Monday, but well off the peak of the day, after President Donald Trump tweeted he will be announcing his decision on the Iran deal on Tuesday.

Elsewhere, in Europe, the continent's major bourses were mostly lower, with a flurry of first-quarter corporate earnings and mergers and acquisitions deals prompting sharp individual price moves.

Earlier, in Asia, markets in the region closed broadly higher, boosted by upbeat China trade data and gains in tech shares.

5. Disney Reports Earnings

As earnings season draws to a close, Disney (NYSE:DIS) is one of the notable names slated to report fiscal second-quarter results after U.S. markets close on Tuesday. The company should report earnings per share of $1.70 on revenue of $14.1 billion, according to estimates.

Investors will likely be particularly interesting in news related to its proposed deal to buy 21st Century Fox as well as results from its cable network business, which includes ESPN.

Disney’s other revenue segments including parks and theater is expected to report good performance, with the latter likely boosted by the release of the Black Panther movie, which had dominated the box office in February.

Other notable earnings expected out Tuesday should include Valeant Pharmaceuticals (NYSE:VRX), Electronic Arts (NASDAQ:EA), Etsy (NASDAQ:ETSY), Match Group (NASDAQ:MTCH), Marriott (NASDAQ:MAR), Monster Beverage (NASDAQ:MNST), and TripAdvisor (NASDAQ:TRIP).

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