Top 5 Things to Know Today In Financial Markets
1. Markets bet on June rate hike
The Federal Reserve left interest rates unchanged on Wednesday market, as was widely expected, and gave a positive assessment of the U.S. economy, suggesting it was still on track for two more rate hikes this year.
The Fed said it expects the economy to rebound after hitting a soft patch in the first three months of the year, noting that the labor market looks solid and inflation is running close to its target, setting the stage for a rate hike next month.
Futures traders are now pricing in around a 71% chance of a hike at the Fed’s June meeting, according to Investing.com’s Fed Rate Monitor Tool, up from about 60% before the Fed statement.
The dollar index, which measures the greenback against a basket of currencies, shot up on the news, rising as high as 99.34. It was last at around the 99.00-level in early New York morning trade.
Meanwhile, 10-year Treasury yields rose close to 2.34% from around 2.30% late Wednesday.
On Wall Street, the blue-chip Dow futures inched up 43 points, or 0.2%, to 21,000, the S&P 500 futures tacked on 6 points, while the tech-heavy Nasdaq 100 futures rose 7 points.
On the data front jobless claims, international trade and productivity and unit labor costs are all set to come out at 8:30AM ET (12:30GMT). Factory orders are due at 10AM ET.
2. House set to vote on GOP healthcare plan
Political concerns, which have taken a backseat recently, may re-emerge, with a U.S. House of Representatives vote on a revised bill to repeal Obamacare due later in the session.
House Majority Leader Kevin McCarthy said Republican leadership is confident there is enough backing for the bill to pass, after key moderate leaders met with President Donald Trump on Wednesday.
The vote will take place just over a month after House Republicans were forced to pull the American Health Care Act from the floor just minutes before a vote after they were unable to wrangle enough of their members to vote for the bill.
3. Macron holds lead on Le Pen
Centrist presidential candidate Emmanuel Macron maintained his lead on far-right opponent Marine Le Pen following a televised political debate ahead of this Sunday’s French election.
A snap Elabe poll suggested that Macron had emerged the victor with 63 points to Le Pen’s 34 after the pair clashed over their visions of France’s future, the euro and terrorism in a TV debate Wednesday night.
The euro ticked up 0.4% to 1.0930 against the dollar, aided by a raft of upbeat economic data.
European stocks posted firm gains, with France’s CAC 40 hitting its highest level since the global financial crisis, while Germany’s DAX touched a fresh all-time peak.
4. Metals sell-off continues
Metal prices extended their biggest daily decline this year on Thursday, amid a firmer dollar and concerns about Chinese demand for commodities like steel and iron.
China’s iron ore futures fell 8% on the Dalian Commodity Exchange on Thursday, taking the price to its lowest level since October.
Copper futures in London were last down 0.5%, building on Wednesday’s 3.5% slump.
A Caixin reading on China’s service-sector activity hit its lowest level in nearly a year for April on Thursday, adding to concerns about the country’s economic health.
Among precious metals, gold fell $12, or 1%, to $1,234 an ounce. The yellow metal was on pace to have its lowest settlement since March 21, after falling 0.7% on Wednesday.
5. Glut woes hit oil prices again
Oil prices struggled near a five-week low on Thursday, as concern over a global supply glut lingered after data showed U.S. crude stockpiles fell less than expected last week.
The U.S. West Texas Intermediate crude June contract lost 39 cents, or around 0.8%, to $47.43 a barrel. The U.S. benchmark touched its weakest level since March 27 at $47.30 on Wednesday.
Elsewhere, Brent oil for July delivery on the ICE Futures Exchange in London dipped 36 cents to $50.43 a barrel, not far from a five-week low of $50.14 logged on Tuesday.