(PhatzNewsRoom / AP) — European shares are mostly lower after a day of gains in Asia, as a decision by President Donald Trump looms on whether to pull out of the U.S. nuclear deal.
KEEPING SCORE: Germany’s DAX dropped 0.5 percent to 12,885.50 and the CAC 40 in France lost 0.3 percent to 5,513.20. Britain’s FTSE 100 edged 0.1 percent higher to 7,575.63. The future for the S&P 500 slipped 0.2 percent to 2,664.50 and the future for the Dow lost 0.1 percent to 24,265.00, pointing to a downbeat start on Wall Street.
ASIA’S DAY: Japan’s Nikkei 225 stock index added 0.2 percent to 22,508.69 and Hong Kong’s Hang Seng index climbed 1.4 percent to 30,402.81. The Shanghai Composite index jumped 0.8 percent to 3,161.50. South Korea’s Kospi gave up early gains to lose 0.5 percent, ending at 2,449.81, while Australia’s S&P ASX 200 edged 0.1 percent higher to 6,091.90. Shares were higher in Singapore and Taiwan but fell 1.9 percent in Indonesia after the government reported economic growth slowed in January-March.
IRAN DECISION: Trump was due to tell the world Tuesday bwhether he plans to carry out his threat to pull out of the landmark nuclear accord with Iran and almost surely ensure its collapse. There are no signs that European allies enlisted to “fix” the deal had persuaded him to preserve the accord, whose loss would reflect a growing rift between the U.S. and its allies in Europe.
CHINA TRADE: China’s exports expanded by 21.5 percent from a year earlier in April, bouncing back from a contraction the previous month. Imports expanded 12.9 percent year-on-year in dollar terms, leaving the country’s politically sensitive monthly trade surplus with the rest of the world at $28.8 billion, a turnaround from the previous month’s $5 billion deficit.
THE QUOTE: “The widening China-US trade surplus reflects the difficulty of significantly closing the trade gap between the two countries in the near term, but it is unlikely to obstruct the constructive progress made recently,” Betty Wang of ANZ said in a commentary.
ENERGY: Oil prices fell back after a rally that had them closing above $70 a barrel for the first time since November 2014. On Monday, oil futures climbed to their highest level since November 2014 as a May 12 deadline approached for the U.S. to decide whether to remain in the nuclear agreement with Iran. Tuesday in Asia, benchmark U.S. crude oil dropped 91 cents to $69.82 in electronic trading on the New York Mercantile Exchange. Brent crude, which is used to price international oils, lost 73 cents per barrel to $75.45 per barrel.
CURRENCIES: The dollar slipped to 109.00 yen from 109.07 yen on Monday. The euro fell to $1.1890 from $1.1924.
– Here are the top five things you need to know in financial markets on Tuesday, May 8:
1. Markets Brace For Trump’s Decision On Iran
Investors waited on an announcement by President Donald Trump on whether the United States will pull out of the 2015 international nuclear deal and reinstate sanctions against Iran.
Trump will announce his decision, which comes four days earlier than the May 12 deadline, from the White House at 2:00PM ET (1800GMT).
A senior U.S. official said it was unclear if efforts by European allies to address Trump’s concerns would be enough to save the pact, but European diplomats said privately they expected Trump to effectively withdraw from the agreement.
Should Trump pull the U.S. out of the agreement, Iranian crude exports could be hit, adding to tightness in the oil market.
Iran, which is a major Middle East oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC), resumed its role as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran’s nuclear program.
2. Oil Prices Lose Steam
After oil prices climbed to fresh three-and-a-half-year highs on Monday, the energy market pared back its gains ahead of Trump’s decision on the future of the Iran nuclear deal.
New York-traded WTI crude futures slumped 92 cents, or around 1.3%, to $69.81 a barrel, pulling back from Monday’s peak of $70.84, a level not seen since November 2014.
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., declined 80 cents, or 1.1%, to $75.38 a barrel, after climbing to $76.34 in the last session, its highest since November 2014.
Market analysts said the fall in prices was akin to “buy the rumor, sell the news” kind of behavior for markets, which had initially expected a statement from Trump only later in the week.
Investors will also focus on fresh data on U.S. commercial crude inventories to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise.
Industry group the American Petroleum Institute is due to release its weekly report at 4:30PM ET (2030GMT), amid forecasts for an oil-stock drop of around 1.1 million barrels.
3. Dollar Rises To Fresh 2018 High… Again
The dollar ticked higher against a basket of currencies, reaching a fresh 2018 peak amid indications that the U.S. economy remains on track, leaving the Federal Reserve on pace to raise benchmark interest rates further this year.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up around 0.2% at 92.82, after touching a session peak of 92.90, its strongest level since late December.
Demand for the dollar lately has been underpinned by bets that the Federal Reserve will continue raising rates while other central banks, including the European Central Bank and the Bank of England, will act more slowly as recent economic figures there suggest cooling momentum.
The euro remained on the back foot against the dollar, one day after falling below the 1.19-level for the first time this year. The common currency last changed hands at 1.1885, which was the weakest level in four months.
Meanwhile, the British pound traded at 1.3510, within sight of its four-month low of 1.3487 touched last week.
Fed Chairman Jerome Powell said early Tuesday at an event in Switzerland that financial markets have gotten the message on the U.S. central bank’s plan for gradual interest-rate increases and “should not be surprised” by its actions.
The Fed currently forecasts two more rate hikes in 2018, although market expectations of a third move higher before the end of the year has been gaining momentum in recent weeks amid strengthening inflation prospects.
4. U.S. Stock Futures Point To Lower Open
U.S. stock futures pointed to a lower open, with markets looking set to extend a late-session selloff seen on Monday.
U.S. stock benchmarks finished higher on Monday, but well off the peak of the day, after President Donald Trump tweeted he will be announcing his decision on the Iran deal on Tuesday.
Elsewhere, in Europe, the continent’s major bourses were mostly lower, with a flurry of first-quarter corporate earnings and mergers and acquisitions deals prompting sharp individual price moves.
5. Disney Reports Earnings
As earnings season draws to a close, Disney (NYSE:DIS) is one of the notable names slated to report fiscal second-quarter results after U.S. markets close on Tuesday. The company should report earnings per share of $1.70 on revenue of $14.1 billion, according to estimates.
Investors will likely be particularly interesting in news related to its proposed deal to buy 21st Century Fox as well as results from its cable network business, which includes ESPN.
Disney’s other revenue segments including parks and theater is expected to report good performance, with the latter likely boosted by the release of the Black Panther movie, which had dominated the box office in February.
Other notable earnings expected out Tuesday should include Valeant Pharmaceuticals (NYSE:VRX), Electronic Arts (NASDAQ:EA), Etsy (NASDAQ:ETSY), Match Group (NASDAQ:MTCH), Marriott (NASDAQ:MAR), Monster Beverage (NASDAQ:MNST), and TripAdvisor (NASDAQ:TRIP).