(PhatzNewsRoom / AP) —- World share prices were mixed Wednesday, with European benchmarks posting modest gains after a day of losses in most major Asian markets. China-U.S. trade talks, North Korea’s cancellation of meetings with South Korea and weaker than expected Japanese economic growth weighed on sentiment.
KEEPING SCORE: Germany’s DAX added 0.2 percent to 12,992.35 and the CAC 40 of France edged 0.1 percent higher to 5,559.51. Britain’s FTSE 100 rose 0.2 percent to 7,739.10. The future for the S&P 500 climbed 0.1 percent to 2,712.40 and the future for the Dow also gained 0.1 percent to 24,687.00, pointing to early gains on Wall Street.
ASIA’S DAY: Japan’s Nikkei 225 stock index lost 0.4 percent to 22,712.23 and the Kospi in South Korea edged less than 0.1 percent higher to 2,459.82. Hong Kong’s Hang Seng slipped 0.1 percent to 31,110.20, but the S&P ASX 200 added 0.2 percent to 6,107.00. The Shanghai Composite index dropped 0.7 percent to 3,169.57 and shares in Southeast Asia were mixed.
NORTH KOREA: North Korea canceled a high-level meeting with South Korea, threatening to scrap a historic summit next month between President Donald Trump and North Korean leader Kim Jong Un over military exercises between Seoul and Washington that Pyongyang has long claimed are rehearsals for invasion.
TRADE TALKS: As the Trump administration resumes talks in Washington with senior Chinese officials seeking to ward off a trade war between the world’s two biggest economies, American companies were seeking relief from tariffs the president has threatened to impose on at least $50 billion in Chinese goods.
JAPAN ECONOMY: Japan’s economy contracted at an annualized rate of 0.6 percent in the January-March quarter, as private investment and public spending declined, according to Cabinet Office data released Wednesday. The latest data showed consumer spending was flat — long a challenge in a country where wages have stagnated for decades.
QUOTABLE: “Trade friction between the U.S. and other major countries … including China, and prolonged negotiations could weigh on demand for Japanese machinery and electric parts and devices, and delay the recovery in exports,” Nobumasa Takeuchi of IHS Markit said in a commentary.
ENERGY: Benchmark U.S. crude oil gave up 27 cents to $71.04 per barrel in electronic trading on the New York Mercantile Exchange. On Monday it rose 35 cents to settle at $71.31 a barrel. Brent crude, used to price international oil, shed 49 cents to $77.94 a barrel in London.
CURRENCY: The dollar fell to 110.21 yen from 110.36 yen late Tuesday. The euro weakened to $1.1833 from $1.1839.
– Here are the top five things you need to know in financial markets on Wednesday, May 16:
1. Macy’s Quarterly Report In Focus
Macy’s (NYSE:M) is one of the last notable names slated to report fiscal first-quarter results before U.S. markets open Wednesday, as the earnings season continues to wind down.
The retailer is expected to report earnings of 40 cents per share on revenue of $5.42 billion, according to estimates.
Investors will likely be particularly interested to hear how adverse winter weather across much of the U.S. in the first three months of the year affected same store sales.
Market players will also be closely watching Macy’s comments regarding its real estate portfolio.
Shares of Macy’s were trading 0.5% lower in premarket. The stock is up 13.1% for the last three months, and up 18.8% for the year to date.
2. U.S. Housing Data, Fed Speakers On Tap
Market players will focus on U.S. housing sector data to gauge the strength of the world’s largest economy and how it will impact monetary policy in the months ahead.
The Commerce Department at 8:30AM ET is expected to report building permits fell 2.3% from a month earlier to 1.347 million units, while housing starts are forecast to fall 0.7% to 1.310 million units.
Wednesday’s calendar also features industrial production data at 9:15AM ET.
On the central bank front, a speech by Atlanta Federal Reserve Bank President Raphael Bostic at 8:30AM ET is also likely to warrant attention as investors seek an insight into Fed’s thinking on monetary policy.
Fed official James Bullard rounds off the day with a speech at 6:30PM ET.
Data on retail sales for April released Tuesday broadly met expectations while prior months’ results were revised higher, indicating U.S. consumer spending will likely bounce back in the second quarter after a tepid start to the year.
3. Dollar Firms Near 5-Month Highs, 10-Year Yield At 3.06%
The dollar held firm near the prior day’s five-month high, as U.S. Treasury yields remained near their recent peaks.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was last at 93.25, a shade higher on the day. It climbed to the highest since mid-December at 93.35 on Tuesday.
Meanwhile, the U.S. 10-year Treasury yield stood at around 3.06% in early action, after surging to a seven-year peak of 3.095% in the last session.
The Fed-sensitive 2-year yield was at 2.58%, not far from its highest level since August 2008.
The recent bounce in the dollar and yields came as strengthening inflation prospects added to expectations of a more hawkish approach from the Federal Reserve this year.
Investors have fully priced in a rate rise at the Fed’s next policy meeting on June 12-13. However, Wall Street is divided over how many more times the central bank will raise interest rates after that, with some expecting two more hikes, while others are forecasting three more.
4. Dow Futures Point To A Quiet Start
U.S. stock futures were little changed, indicating the Dow could struggle to rebound from its 200-point decline on Tuesday.
U.S. stocks fell sharply on Tuesday, with the Dow posting its first loss in eight sessions after Home Depot (NYSE:HD) reported quarterly sales that fell short of Wall Street’s expectations and interest rates breached new highs.
Elsewhere, in Europe, the continent’s major bourses inched lower in mid-morning trade, as investors continued to focus on Italian politics.
Earlier, in Asia, markets in the region closed in negative territory, as geopolitics returned to the forefront after Pyongyang abruptly called off talks with Seoul, throwing a U.S.-North Korean summit into doubt.
5. Oil Slips Ahead Of EIA Supply Report
The U.S. Energy Information Administration will release its official weekly oil supplies report for the week ended May 11 at 10:30AM ET (1430GMT), amid forecasts for an oil-stock drop of 763,000 barrels.
Analysts also forecast a fall of 1.4 million barrels for gasoline stockpiles, while distillate inventories are expected to drop by 2.1 million barrels.
After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories climbed by nearly 4.9 million barrels last week.
Despite the dips, both oil benchmarks remained close to their November 2014 highs of $71.92 and $79.47 a barrel respectively, reached the previous day, amid concerns that U.S. sanctions on Iran may restrict crude exports from a major producer.