TOKYO (AP) — Global shares mostly fell Wednesday but Japan’s benchmark finished slightly higher after a muted market response to the U.S.-North Korean summit. Investors have now turned their eyes to this week’s three central bank meetings.
KEEPING SCORE: France’s CAC 40 was up 0.2 percent in early trading at 5,465.88. Germany’s DAX fell 0.2 percent to 12,817.53 and Britain’s FTSE 100 dropped 0.1 percent to 7,694.42. U.S. shares were set to be mixed with Dow futures flat at 25,311 and S&P 500 futures up 0.1 percent at 2,790.
ASIA’S DAY: Japan’s benchmark Nikkei 225 was up 0.4 percent at 22,966.38. South Korea’s Kospi fell less than 0.1 percent to 2,468.83. Hong Kong’s Hang Seng dropped 1.2 percent to 30,725.15, while the Shanghai Composite index dropped 1.0 percent to 3,049.80. Australia’s S&P/ASX 200 dropped 0.5 percent to 6,023.50.
TRUMP-KIM SUMMIT: U.S. President Donald Trump and North Korean leader Kim Jong Un concluded their summit Tuesday by committing to working “toward complete denuclearization of the Korean Peninsula” and to “build a lasting and stable peace regime” there. Trump surprised both the Pentagon and the South Korean military by promising to end U.S. military exercises with South Korea. Details were left vague, but progress there has the chance of lowering geopolitical tensions in a region that includes three of the world’s largest economies: Japan, China and South Korea.
CENTRAL BANKS: The U.S. Federal Reserve was to resume a two-day meeting on interest rates later Wednesday. Investors expect the central bank to raise its benchmark rate by a quarter of a percentage point to a range of 1.75-2 percent. However, investors’ attention will focus more on how many additional rate hikes Fed officials may do this year. On Thursday, the European Central Bank will meet and could outline an end to its stimulus program, while on Friday the Bank of Japan is due to give its latest policy update.
ANALYST’S TAKE: “Fed are the ones that could surprise on the hawkish side which should support a stronger U.S. dollar vs. EUR, AUD and JPY,” said Stephen Innes, analyst at Oanda.
ENERGY: Benchmark U.S. crude lost 6 cents to $66.30 a barrel. Brent crude, used to price international oils, fell 21 cents to $75.67 per barrel in London.
CURRENCY: The dollar rose to 110.63 yen from 110.30 late Tuesday in Asia. The euro fell slightly to $1.17 from $1.18.
Investing.com – Here are the top five things you need to know in financial markets on Wednesday, June 13:
The Federal Reserve is almost certain to raise interest rates by a quarter point for a second time this year at the conclusion of its two-day policy meeting at 2:00PM ET this afternoon. That would put the fed funds target range in a range between 1.75%-2%, inching closer to a neutral policy stance.
With the rate hike almost fully priced in, markets are focusing on whether the Fed will hint at the prospect of four rate hikes in 2018 when it releases new forecasts for economic growth and interest rates, known as the “dot-plot”.
The probability of four total rate hikes this year, rather than the three currently forecast by the Fed, have strengthened recently amid signs of rising inflation and strong economic growth.
2. U.S. Stocks Set For Modest Gains At The Open
U.S. stock futures pointed to modest gains at the open, as investors awaited further guidance from the Federal Reserve on the likely trajectory of interest rate hikes this year.
At 5:40AM ET, the blue-chip Dow futures were up 20 points, or around 0.1%, while the S&P 500 futures tacked on 3 points, or roughly 0.1%. The tech-heavy Nasdaq 100 futures indicated a gain of 13 points, or about 0.2%, which would put the benchmark on track to test its record high reached earlier this week.
The earnings calendar will be pretty empty with no notable companies reporting results.
U.S. stocks ended slightly higher on Tuesday, with investors appearing to shrug off a historic U.S.-North Korea summit.
Elsewhere, in Europe, most of the continent’s major bourses hovered around the flatline in quiet mid-morning trade, with the different sectors moving in opposite directions.
3. Dollar Climbs Before Fed Decision
The dollar reached a three-week high against the yen and stood tall against the euro ahead of a Federal Reserve policy meeting that could give clues on how many more U.S. rate hikes there will be this year.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.1% at 93.92, the best level since June 5.
Meanwhile, the 10-year U.S. Treasury yield stood at 2.955%.
Besides the Fed, today’s calendar will bring investors the May data on producer prices, which is expected to show prices rose 2.8% over the prior year in May, as signs of inflation pressures building in the economy continue to add up.
4. Oil Markets Await Fresh Weekly U.S. Inventory Data
The U.S. Energy Information Administration (EIA) will release its official weekly oil supplies report for the week ended June 8 at 10:30AM ET, amid forecasts for an oil-stock drop of 1.4 million barrels.
The data will also offer fresh indications on how fast domestic output levels continue to rise. U.S. crude production – driven by shale extraction – is currently at an all-time high of 10.8 million barrels per day (bpd).
After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories increased by 833,000 barrels last week.
Oil prices were on the backfoot ahead of the data, with U.S. WTI crude futures sliding 24 cents, or around 0.4% to $66.12 per barrel, while London-traded Brent crude futures were at $75.45 per barrel, down 40 cents, or about 0.6%.
5. Bitcoin’s Collapse Accelerates As Selloff Continues
Bitcoin tumbled to its lowest level since February, as the meltdown in the world’s largest digital currency accelerated amid mounting regulatory and security concerns after the weekend hacking of a South Korean cryptocurrency exchange.
Bitcoin was last down around 5%, or $350, at $6,487.70 on the Bitfinex exchange, a level last seen on February 5.
Ethereum, the world’s second largest cryptocurrency by market cap, was down almost 12% at $472.70, its worst level since April 11.
Meanwhile, Ripple’s XRP token was trading at $0.53361, down 10% for the day.