Here are the top five things you need to know in financial markets on Thursday, May 24:
1. U.S.-China Trade Dispute Remains In Focus
Trade concerns continued to nag at investors after U.S. President Donald Trump appeared to have opened a new front in the trade war by considering new tariffs, this time on cars.
The Trump administration is weighing a plan that would impose tariffs of as much as 25% on imported vehicles, citing national security grounds.
The move opens yet another front in the Trump administration’s trade battles with both allies and rivals, a confrontational approach that has yielded mixed results.
Meanwhile, China’s Commerce Ministry said earlier that it had not pledged to cut the country’s trade surplus with the U.S. by a certain figure, fueling uncertainty over trade talks between the world’s two largest economic powers.
2. U.S. Stock Futures Point To Muted Open
U.S. stock futures pointed to a muted open, as investors looked ahead to a fresh batch of corporate earnings and economic data while monitoring fresh developments surrounding talks with China and North Korea.
At around 5:45AM ET, the blue-chip Dow futures dipped around 7 points or less than 0.1%, the S&P 500 futures inched up 1 point, while the tech-heavy Nasdaq 100 futures indicated a gain of 7 points or roughly 0.1%.
Stocks ended slightly higher on Wednesday, as an early session sell-off was entirely erased following the release of the minutes from the Federal Reserve’s latest policy meeting.
On the earnings front, reports from Best Buy (NYSE:BBY), Ross Stores (NASDAQ:ROST), and Gap (NYSE:GPS) will be the notable reporters from the retail sector, while Hormel Foods (NYSE:HRL), Autodesk (NASDAQ:ADSK), and McKesson (NYSE:MCK) will also report results on Thursday.
Earlier, in Asia, markets in the region stumbled as investors reacted to fresh setbacks in trade talks between the U.S. and China.
3. Dollar Loses Steam After Dovish Fed Minutes
The dollar lost momentum against a basket of currencies, pulling back from a five-month high after the minutes of the Fed’s last policy meeting were seen as dovish.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.25% at 93.67, down from a five-month high of 94.12 set on Wednesday.
Meanwhile, the U.S. 10-year Treasury yield stood at around 3.01% in early action.
While the minutes showed most policymakers thought it likely another interest rate increase would be warranted “soon”, they also revealed the Fed would tolerate inflation rising above its goal for a time, suggesting it would not raise the tempo at which it increases interest rates.
A report on existing home sales in April and the Kansas City Fed’s latest manufacturing activity reading is then due at 10AM and 11AM respectively.
4. Oil Prices Slip-On Rising Stockpiles, OPEC Worries
Crude prices were on the backfoot, pressured by a surprise jump in weekly U.S. crude supplies.
Speculation that the Organization of the Petroleum Exporting Countries may decide to boost output to make up for a Venezuelan production shortfall and potential lost supply from Iran also weighed on oil prices
5. DOJ Launches Investigation Into Bitcoin Manipulation
The U.S. Department of Justice has opened a criminal investigation into whether traders are manipulating the price of bitcoin and other cryptocurrencies, according to sources familiar with the matter.
Investigators are focused on illegal moves that can affect prices, such as spoofing, which refers to flooding a market with fake orders.
Federal prosecutors are working with the Commodity Futures Trading Commission, the sources said.
Bitcoin prices sank 7%, or around $550, to $7,339 (BTC/USD), after falling sharply Wednesday.