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Top 5 Things to Know in the Market on Tuesday

Published 25/06/2019, 10:49
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Investing.com - Here are the top five things you need to know in financial markets on Tuesday, June 25:

1. Gold jumps as Iran threatens end to diplomacy

Gold prices jumped to fresh six-year highs on Tuesday as tensions in the Middle East escalated further.

After U.S. President Donald Trump targeted Iran’s Supreme Leader Ayatollah Ali Khamenei and other top officials with sanctions designed to cut off access to financial resources, Iranian President Hassan Rouhani called the action “outrageous and idiotic” and destined for “certain failure”.

Iranian Foreign Ministry spokesman Abbas Mousavi said the “useless sanctions” imply the “permanent closure of the path of diplomacy”.

Spot gold touched a fresh six-year high of $1,438.99 overnight as the geopolitical tension boosted safe-haven demand.

The precious metal is up nearly 10% so far this month as the escalation of the U.S.-Iran conflict and a soft global economic outlook have boosted its appeal. The prospect of looser monetary policy around the world, notably from the Federal Reserve - has caused a decline in bond yields, making gold relatively more attractive than other haven assets.

2. Powell expected to confirm Fed’s easing bias

At a time when expectations are running high that the U.S. central bank will deliver a rate cut as soon as July, remarks from Fed Chairman Jerome Powell on monetary policy and the economic outlook on Tuesday will be closely watched for further confirmation.

Powell will be speaking in a New York Times interview at the Council on Foreign Relations in New York at 1:00 PM ET (17:00 GMT) on Tuesday.

Powell is unlikely to provide new clues on policy following his press conference less than a week ago. Given that President Trump renewed his attacks on the Fed via Twitter on Monday, calling it a "stubborn child" for not cutting interest rates yet, markets will pay particular attention to any comments about central bank independence.

3. Global stocks cautious due to geopolitical tension, trade worries

Global stocks traded lower across the board on Tuesday as the spat between U.S. and Iran depressed risk appetite.

Investors were also cautious ahead of the G20 summit starting on Friday, and on an expected bilateral meeting between Trump and Chinese President Xi Jinping. Hopes are low for a definitive trade agreement to be penned between the world’s two largest economies, but sentiment could be at least partly repaired if the two can agree not to impose any further tariffs in the immediate future. U.S. tariffs on $300 billion of previously unaffected Chinese imports are on track to come into effect early in July.

Read more: Apple (NASDAQ:AAPL)'s Powerful Rally: Is It Sustainable Amid China Trade Risks? - Haris Anwar

Dow futures slipped 21 points, or 0.1%, by 5:47 AM ET (9:47 GMT), S&P 500 futures dipped 4 points, or 0.1%, while Nasdaq 100 futures gave up 20 points, or 0.3%.

Elsewhere, European stocks were also slightly lower, while Asian shares led losses with China’s Shanghai Composite down 0.8%.

4. FedEx, Micron to offer hints for Q2 earnings season

FedEx (NYSE:FDX) and Micron Technology (NASDAQ:MU) are set to release earnings after U.S. markets close on Tuesday, as analysts begin to look ahead to what may be a difficult earnings season for S&P 500 firms.

FedEx, considered a bellwether for the global economy, will likely give insight into the impact of trade tensions on its package delivery service. Micron's report comes after a deluge of analysts downgraded their recommendations, on mounting fears that sanctions on Huawei and the broader effects of the Sino-U.S. trade dispute will continue to pressure chipmakers’ sales.

With the second-quarter earnings season soon to start, analysts are painting a dim picture of the business outlook. They expect both 2Q and 3Q earnings to fall in year-on-year terms, according to Factset. If so, that would be the first time they have declined for three consecutive quarters since 2016.

5. Consumer confidence, housing data in focus

Tuesday’s economic calendar is led by the Conference Board’s publication of its consumer confidence index for June at 10:00 AM ET (14:00 GMT).

The consensus expects a dip in consumer optimism, reflecting the sharp slowdown in employment growth last month.

At the same time, traders will receive the latest measure of health for the U.S. housing market with the publication of May new home sales.

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