Investing.com - Here are the top five things you need to know in financial markets on Friday, May 18:
1. Doubts rise over China-U.S. trade talks
As the U.S. and China were set to continue trade talks on Friday in Washington, China poured cold water on reports that it was willing to reduce its trade surplus with the U.S. by $200 billion annually by importing more American goods.
News of the offer was leaked Thursday by a Trump administration, but two posts on Chinese state social media disputed the report on Friday while a foreign ministry official said no such offer had been made to his knowledge.
In a more conciliatory tone, China did say on Friday that it is ending its anti-dumping and anti-subsidy investigation into imports of U.S. sorghum.
The news followed words by Trump himself stating that he doubted trade talks with China would be successful. “Other countries have become very spoiled, because they always got 100% of whatever they wanted from the United States," the President said in a briefing Thursday.
2. Fed speakers to be watched on data-less day
With no major U.S. economic reports set for release on Friday, traders will focus on a series of appearances from Federal Reserve policymakers to gauge plans on the path of rate hikes this year.
Cleveland Fed president Loretta Mester focused mostly on bank regulation, warning against unwinding steps taken during the financial crisis. Mester was upbeat on the economy, saying that the outlook was as strong as it has been “in a long time”.
Both Fed governor Lael Brainard and Dallas Fed chief Robert Kaplan will be making separate appearances at 9:15AM ET (13:15GMT).
The next rate hike is fully priced in for the June 12-13 meeting, although markets remain uncertain as to whether there will be, after the increase seen in March, a total of three or four hikes in 2018. Odds for the fourth hike in December hovered just above 50% on Friday, according to Investing.com’s Fed Rate Monitor Tool.
While waiting for clues from policymakers, the dollar was largely unchanged against major rivals on Friday, hovering near five-month highs.
3. Oil heads for solid weekly gains ahead of data on U.S. shale production
Oil headed higher in early morning trade on Friday, hovering just below 3½ year intraday highs reached a day earlier, as looming sanctions against Iran, the continuing economic crisis in Venezuela and strong demand continued to support prices.
Investors looked ahead Friday to the latest weekly installment of drilling activity from Baker Hughes that will provide investors with fresh insight into U.S. oil production and demand.
Data last week showed the number of U.S. oil rigs rose for the sixth week in a row, fueling concerns that increased production stateside could eventually derail OPEC-led efforts to curb output and balance markets.
U.S. crude oil futures gained 0.28% to $71.69 at 5:55AM ET (9:55GMT), while Brent oil rose 0.52% to $79.71, off Thursday’s high of $80.50.
4. U.S. futures point to higher open, Dow on track for slight weekly decline
U.S. futures pointed to a slightly higher open on with the Dow currently on track for weekly losses of about 0.5%. Geopolitical concerns have been the main market driver this week with retail sales having been the only major economic data and while earnings season comes to a close. Deere & Company (NYSE:DE) and Campbell Soup Company (NYSE:CPB) will be among firms reporting Friday before the opening bell.
At 5:56AM ET (9:56GMT), the blue-chip Dow futures gained 76 points, or 0.30%, S&P 500 futures rose 7 points, or 0.24%, while the Nasdaq 100 futures traded up 19 points, or 0.28%.
Elsewhere, European stocks traded lower on Friday, but dipped were still on track to pocket their eighth straight weeks of gains, supported by a rally in energy shares and a weaker euro, which helped investors shrug off worries over Italy
Earlier, Asian shares closed higher as traders appeared to take heart into China’s announcement that it would end an anti-dumping probe into U.S. sorghum import and as bilateral trade talks moved into a second day in Washington.
5. Japanese inflation slowdown continues for 2nd month
Data released on Friday showed that Japanese inflation slowed for a second consecutive month, dropping to a 0.6% rise and missing expectations for a smaller easing to 0.7%.
The latest slowdown in consumer prices will likely heighten questions about the sustainability of the Bank of Japan’s stimulus program, which is widely thought to be both at the limits of its powers and producing diminishing returns.
Japan's economy contracted more than expected at the start of this year, suggesting growth has peaked after the best run of expansion in decades.
While analysts expect growth to rebound in the current quarter, any sign of the economy hitting a plateau could further push back market expectations of an exit from easy monetary policy.
By 6:01AM ET (10:01GMT), USD/JPY traded up 0.18% to 110.96.