Here are the top five things you need to know in financial markets on Wednesday, September 5:
1. U.S.-Canada Trade Talks Resume
2. U.S. Stocks Futures Point to Lower Open
3. Dollar Gains as Emerging Market FX Pain Continues
4. Oil Prices Tumble as Storm Threat Eases
5. Big Tech to Testify Before Senate
” Trade-related headlines will continue to drive market sentiment in the week ahead, as investors watch further developments in the ongoing trade spat between the U.S. and its major trading partners.
Trade-war fears have been simmering for months, with investors jittery over the prospects of further escalation in tensions having an impact on the global economy.
Besides trade rhetoric, the monthly U.S. jobs report, which is expected to remain in territory consistent with a strengthening labor market, will be the highlight of the holiday-shortened week.
U.S. markets will remain closed on Monday for the Labor Day holiday.
Meanwhile, market participants will also be looking ahead to monthly trade figures out of China to see if the ongoing conflict with the U.S. had any impact on exports and imports in August. ”
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” U.S. economic growth was a bit stronger than initially thought in the second quarter, notching its best performance in nearly four years and putting the economy on track to hit the Trump administration’s goal of 3 percent annual growth.
Gross domestic product increased at a 4.2 percent annualized rate, the Commerce Department said on Wednesday in its second estimate of GDP growth for the April-June quarter. That was slightly up from the 4.1 percent pace of expansion reported in July and was the fastest rate since the third quarter of 2014.
The economy grew at a 2.2 percent pace in the January-March period. The slight upward revision to growth last quarter reflected more business spending on software than previously estimated and less imported petroleum.
Stronger software investment and a smaller import bill offset a downward revision to consumer spending. President Donald Trump, whose administration has vowed to boost annual economic growth to 3 percent on a sustainable basis, cheered the revised second-quarter data.
“Our country is doing great!” Trump tweeted. ” […]
“The United States and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-nation pact.
Auto stocks soared and the and the Nasdaq rallied to record highs on the expectation that Canada would sign onto the deal and ease the economic uncertainty caused by U.S. President Donald Trump’s repeated threats to ditch the 1994 accord.
Details of gains and concessions in the deal were only starting to emerge on Monday. Trump threatened he still could put tariffs on Canadian-made cars if Canada did not join its neighbors and warned he expected concessions on Canada’s dairy protections.”
” Prime Minister Malcolm Turnbull suffered a likely fatal blow to his leadership on Thursday as three key Cabinet ministers resigned and demanded he allow another ballot of party lawmakers to decide his fate.
Finance Minister Mathias Cormann, Communications Minister Mitch Fifield and Jobs Minister Michaelia Cash held a news conference to announce their resignations and demand Turnbull convene an immediate meeting. His chief rival Peter Dutton, a lightning rod for disaffection with the government’s slumping poll ratings, narrowly failed to unseat the prime minister in a vote on Tuesday and intends to challenge again.
The resignations “mean it’s game over for him and Australia will have a new leader by the end of day,” said Haydon Manning, an associate professor of politics and public policy at Flinders University. “My money would be on Dutton but you can’t rule out another candidate giving it a go.” ”
” Making America great again isn’t proving so great for other parts of the world.
With the rise in the dollar and interest rates already squeezing emerging economies just as President Donald Trump’s trade war threatens China, the U.S. is set to be the only Group of Seven nation to see economic growth accelerate this year as Trump’s tax cuts kick in.
The end of the short-lived euphoria of a synchronized global upswing is already evident in financial markets. NatWest Markets notes its basket of so-called growth assets such as the Australian dollar and is down about 4.5 percent this year compared with the almost 7 percent gain of the Standard & Poor’s 500 Index.
The gap in performance “certainly captures the imbalanced nature of growth this year,” said Jim McCormick (NYSE:), head of cross-asset strategy at NatWest.
The global backdrop will frame discussions when the Federal Reserve holds its annual policy symposium this week in Jackson Hole, Wyoming, at which Chairman Jerome Powell will speak. The Fed’s two interest-rate hikes of 2018 have helped lift the dollar almost 6 percent on a trade-weighted basis this year, making it costlier for international borrowers to repay loans. ”
” The dollar edged higher against a basket of the other major currencies on Wednesday as investors awaited the outcome of trade talks between China and the U.S. this week and monitored growing political risks in the U.S.
The , which measures the greenback’s strength against a basket of six major currencies, edged up 0.13% to 95.26 by 04:03 AM ET (08:03 AM GMT) after falling 0.69% the previous day.
Market sentiment has been boosted by the between Washington and Beijing. ”
” With the U.S. economy at full employment and inflation at the Federal Reserve’s 2 percent goal, the U.S. central bank should press on with its plan for gradual interest rate hikes at least for the next nine to 12 months, a policymaker said on Tuesday.
Only once short-term rates reach a “neutral” level where they are neither stimulating nor braking the economy should the central bank potentially stop raising rates and figure out what to do next, Dallas Fed President Robert Kaplan said in an essay.
Neutral, he said, is somewhere between 2.5 percent and 2.75 percent.
“It would take approximately three or four more federal funds rate increases of a quarter of a percent to get into the range of this estimated neutral level,” Kaplan wrote in the essay, which was published by the Dallas Fed. ”
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” China’s Foreign Ministry said on Tuesday that it hopes a good outcome can be reached during trade talks this week with the United States.
Ministry spokesman Lu Kang made the remark at a regular news briefing, after U.S. President Donald Trump said he does not expect much progress from the talks to be held in Washington. ”
” Federal Reserve Bank of Atlanta President said prospects for an inversion in the Treasury yield curve, which is widely viewed as a signal of a possible recession, would prompt him to dissent against further interest-rate hikes.
“I pledge to you I will not vote for anything that will knowingly invert the curve and I am hopeful that as we move forward I won’t be faced with that,’’ Bostic said Monday in Kingsport, Tennessee, in response to an audience question. “The market is going to do what the market does, and we have to pay attention and react.’’ ”