US STOCKS-Wall St to open lower as optimism over trade talks fades - Reuters News
23-May-2018 09:09:25 PM
- U.S.-China trade deal 'too hard to get done'- Trump
- Fed minutes awaited at 2:00 p.m. ET
- Comcast drops on plan to top Disney bid for Fox assets
- Tiffany surges, Target falls after quarterly results
- Futures down: Dow 0.71 pct, S&P 0.62 pct, Nasdaq 0.97 pct
Adds comment, adds details, updates prices
By Medha Singh
May 23 (Reuters) - Wall Street was headed to open lower on Wednesday after U.S. President Donald Trump cast fresh doubts over current U.S.-China trade talks and ahead of a Federal Reserve report that would be watched for cues on pace of future interest rate hikes.
Trump signaled a new direction for the trade talks, saying the current track appeared "too hard to get done", a day after telling reporters that he was not pleased with the recent talks.
The latest uncertainty comes as investors prepare to assess the Federal Reserve's May meeting minutes, scheduled for release at 2:00 p.m. ET, for indications of how many rate hikes are likely this year.
The U.S. central bank lifted borrowing costs in March and policymakers are split between those who expect another two rate hikes this year and those who forecast three, in the backdrop of low unemployment, moderate growth and rising inflation.
"Not only are the trade negotiations in focus but we also have the Fed's minutes and I expect them to be hawkish," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"A combination of the Fed and the trade worries will make today a rocky session."
At 8:53 a.m. ET, Dow e-minis were down 171 points, or 0.69 percent. S&P 500 e-minis were down 16.25 points, or 0.6 percent and Nasdaq 100 e-minis were down 65.75 points, or 0.95 percent.
U.S. 10-year Treasury yields fell to eight-day lows as investors shunned risk. Of the 30 Dow Jones Industrial Average components trading premarket, 29 were in the red.
A majority of the Nasdaq 100 and S&P 100 stocks trading premarket were also lower.
Target sank 4.5 percent after the retailer's quarterly profit rose less than expected as increasing investments dented margins.
Tiffany jumped 14.7 percent after the jeweler's quarterly results blew past estimates and the company also raised its full-year profit forecast and announced a $1 billion share buyback program.
Lowe's gained 4.4 percent after the home improvement retailer maintained its annual financial targets on expectations that demand will recover after a disappointing first quarter.
Comcast fell 2.0 percent after the company said it was preparing to top Disney's offer for certain Twenty-First Century Fox assets.
Disney dropped 0.8 percent, while Fox gained 1.4 percent.
(Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila)
UPDATE 4-Oil falls as concern mounts over OPEC supply, softer global growth - Reuters News
23-May-2018 08:04:51 PM
- Brent, U.S. crude drop on expectations of higher OPEC output
- Talk of sanctions on Iran, lower Venezuelan supply support
Updates prices, adds comment
By Amanda Cooper
LONDON, May 23 (Reuters) - Oil fell on Wednesday, under pressure from a potential increase in OPEC crude output to cool the market's recent rally and cover any shortfalls in supply from Iran and Venezuela.
Across the broader financial markets, investors dumped equities and other industrial commodities in favour of Japanese yen, U.S. and German government bonds and gold, as concern mounted that setbacks to U.S.-China trade talks would undermine increasingly fragile-looking world growth.
Brent crude futures were last down 56 cents at $79.01 a barrel by 1153 GMT, while U.S. crude fell 41 cents to $71.79 a barrel.
Oil prices have gained nearly 20 percent so far this year, with Brent briefly rising above $80, driven primarily by coordinated supply cuts by the Organization of the Petroleum Exporting Countries and partners including Russia.
The price has also been affected by rising geopolitical tensions that could dent global output just as demand is set to hit 100 million barrels per day in the final quarter of this year, according to the International Energy Agency.
In addition, the United States plans to reimpose sanctions on major oil producer Iran, while an economic crisis has decimated Venezuela's crude output.
Based on the prospect of a shortfall in supply relative to demand, investors had driven their bets on a sustained rise in the price of oil to record highs earlier this year.
But with so much uncertainty over how sanctions might affect Iranian supply, fund managers have cut their holdings of crude futures and options by more than 10 percent in the last seven weeks to the lowest level this year.
"It does seem like any move above $80 attracts selling interest right now and that could potentially lead us to a period of consolidation, where I think $77.50 or even $75 might be in focus," Saxo Bank senior manager Ole Hansen said.
"We still have the unquantifiable impact of U.S. sanctions against Iran."
OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters.
"If there is a confirmation of easing OPEC+ supply restrictions, the $100+ a barrel theme will have to move from 'lack of prompt supply' to 'lack of spare capacity'," said Petromatrix strategist Olivier Jakob.
Rising supply in the United States, where shale production is forecast to hit a record high in June, has limited the upward move in prices.
U.S. crude and distillate stockpiles fell last week, while gasoline inventories increased unexpectedly, data from the American Petroleum Institute showed on Tuesday.
(Additional reporting by Naveen Thukral and Jessica Jaganathan in SINGAPORE; Editing by Jon Boyle and Louise Heavens)
PRECIOUS-Gold rises on U.S.-China trade negotiations despite firmer dollar - Reuters News
23-May-2018 08:26:10 PM
- Dollar index inches up ahead of Fed minutes
- Fed May FOMC minutes due at 1800 GMT
(Updates prices)
By Zandi Shabalala
LONDON, May 23 (Reuters) - Gold prices rose on Wednesday on uncertainty about trade talks between the United States and China, which boosted the metal's safe-haven appeal despite a firmer dollar.
The precious metal, which is often used to store wealth in times of political or economic uncertainty, showed signs of strength after U.S. President Donald Trump said he was not pleased with recent talks with China.
Trump also said there was a "substantial chance" his summit with North Korean leader Kim Jong Un will not take place as planned on June 12 amid concerns that Kim is resistant to giving up his nuclear weapons.
The dollar, in which gold and other commodities are priced, rose versus a basket of currencies, with investors awaiting minutes of the Federal Reserve's latest policy meeting due later in the day.
"Normally in such a stronger dollar environment gold is trading lower but it's not and this is indicating there is probably safe-haven flows supporting gold," said Quantitative Commodity Research consultant Peter Fertig.
Spot gold was 0.3 percent higher at $1,294.31 per ounce as of 1210 GMT, having touched its highest since May 15 at $1,297.84. U.S. gold futures for June delivery rose 0.2 percent to $1,294 per ounce.
Prices remained stuck in a narrow range, just below $1,300 per ounce, as investors awaited more clues on the path of U.S. interest rates.
At its previous meeting in May, the U.S. central bank expressed confidence in the economy and kept its benchmark lending rate unchanged. It said inflation was near the bank's target, leaving it on track to raise borrowing costs in June.
Gold is highly sensitive to rising U.S. rates, as these tend to boost the dollar.
Gold has shown reduced volatility in the last few trading sessions as it attempted a break above $1,300 and prices are "waiting for a new, clear direction," said ActivTrades chief analyst Carlo Alberto De Casa.
Holdings of the world's largest gold-backed exchange-traded fund (ETF), New York-based SPDR Gold Shares, fell 0.38 percent to 852.04 tonnes on Monday from 855.28 tonnes on Friday.
"We think gold will be in for a period of consolidation in the short term and are monitoring moves in ETF holdings - which have surprisingly held rather steadily given the move through $1,300 support," said MKS senior precious metals dealer Alex Thorndike.
In other precious metals, silver was steady $16.52 an ounce and platinum was 0.3 percent higher at $905.80 an ounce.
Palladium eased 1.4 percent to $976.97 an ounce.
(Additional reporting by Karen Rodrigues in Bengaluru Editing by Edmund Blair and Elaine Hardcastle)
METALS-Copper slides as optimism over U.S.-China trade talks fades - Reuters News
23-May-2018 08:17:34 PM
Updates with official prices
By Jan Harvey
LONDON, May 23 (Reuters) - Copper fell 2 percent on Wednesday as U.S. President Donald Trump tempered optimism that a China-U.S. trade stand-off was at an end, knocking appetite for cyclical assets and helping pull the metal from the previous day's near one-month high.
Stock markets slid and the dollar fell against the Japanese yen - seen as a haven from risk - after Trump said he was not pleased with recent trade talks with China.
His comments came after U.S. Treasury Secretary Steven Mnuchin said over the weekend that the prospect of a trade war between the two countries was "on hold", giving a boost to nominally riskier assets like stocks and industrial metals.
"If you enter a phase where trade growth slows down, then it is quite bad news for the Chinese economy," Oxford Economics commodities analyst Daniel Smith said.
"The risks around a lot of these things are definitely much higher than they were a few months ago."
China is the world's largest consumer of copper, which is chiefly used in construction.
* COPPER: Three-month copper on the London Metal Exchange was down 2.2 percent at $6,828 a tonne in official trading, after peaking at $6,999 on Tuesday, its loftiest since April 26.
* COPPER INVENTORIES: On-warrant stocks of copper in London Metal Exchange (LME) warehouses -- metal not earmarked for delivery and therefore available to the market -- fell 7,975 tonnes to 226,300 tonnes, their lowest since late January.
* GRASBERG: Global miner Rio Tinto Ltd said it was in discussions to sell its interest in the world's second largest copper mine to Indonesia's state mining holding company Inalum.
* VEDANTA: An Indian court halted the proposed expansion of Vedanta Resources copper smelter where a day earlier 11 people were killed when police fired on protesters seeking closure of the plant on environmental grounds.
* LEAD: LME lead was untraded in official rings, but was last bid down 1 percent at $2,450 a tonne, retreating from a 12-week high hit in the previous session after Chinese speculators drove a rally based by potential supply shortages.
* NICKEL: LME nickel, also untraded in official rings, was last bid 1.6 percent lower at $14,550 a tonne. Nickel remains the best performer among base metals, with a year-to-date gain of nearly 14 percent.
* NICKEL INVENTORIES: LME nickel stockpiles fell by another 2,454 tonnes, data on Wednesday showed, and are at their lowest since 2014, underlining a deficit in the metal used for stainless steel.
* OTHER METALS: LME zinc was down 1.4 percent at $3,014 a tonne in official trading, while aluminium was down 1.3 percent at $2,240 a tonne. Tin was untraded in official rings, but was last up 0.1 percent at $20,550 a tonne.
(Reporting by Manolo Serapio Jr. in Manila
Editing by Edmund Blair and Louise Heavens)
CBOT Trends-Soybeans up 1-2 cents, corn flat-down 1, wheat mixed - Reuters News
23-May-2018 09:26:37 PM
CHICAGO, May 23 (Reuters) - Following are U.S. trade expectations for the resumption of grain and soy complex trading at the Chicago Board of Trade at 8:30 a.m. CDT (1330 GMT) on Wednesday.
WHEAT - Mixed, up 1 cent per bushel to down 1 cent
- Wheat mixed as market pauses a day after the CBOT July contract notched a 2-1/2 week high at $5.30-1/4 a bushel. Futures underpinned by technical buying, short-covering and worries about dry conditions curbing yields in parts of North America, Russia and Australia.
- Millers in Asia have in the past month or so booked up to 1 million tonnes of new-crop Black Sea wheat for shipments starting in August, two of the traders said, with a wave of similar deals expected to follow.
- CBOT July soft red winter wheat last up 1 cent at $5.22-1/2 per bushel. K.C. July hard red winter wheat last traded up 1-1/4 cents at $5.41-3/4 and MGEX July spring wheat was up 2-1/4 cents at $6.35-1/4 a bushel.
CORN - Steady to down 1 cent per bushel
- Corn flat to fractionally lower, consolidating a day after the new-crop December contract reached $4.25, a 10-month high, triggering scattered farmer sales.
- The USDA said private exporters reported sales of 140,000 tonnes of optional-origin corn to Saudi Arabia, including 70,000 tonnes for delivery in the 2017/18 marketing year and another 70,000 tonnes for 2018/19.
- CBOT July corn last traded unchanged at $4.04-3/4 a bushel.
SOYBEANS - Up 1 to 2 cents per bushel
- Soybeans edging higher on expectations of improving demand from top global buyer China as trade tensions ease. China's state grain stockpiler returned this week to the U.S. soybean market for the first time since early April, two sources said.
- However, U.S. President Donald Trump signaled a new direction in U.S. and China's trade talks, saying the current track appeared "too hard to get done" and that any possible deal needed "a different structure."
- The Brazilian government will propose a reduction of a tax on diesel in a bid to end a nationwide truckers' protest against higher fuel prices, which is disrupting economic activity including soybean movement.
- CBOT July soybeans last up 1 cent at $10.31-1/2 per bushel.
(Reporting by Julie Ingwersen)
FOREX-Euro plunges as risk aversion, Italy concerns weigh - Reuters News
23-May-2018 07:41:41 PM
- Euro/franc unwinds all of its post Italy election surge
- Yen posts biggest single day rise against dollar in year
- Derivative markets signal more weakness for the euro
Adds quotes, details
By Saikat Chatterjee
LONDON, May 23 (Reuters) - The euro fell to near three-month lows against the Swiss franc on Wednesday as fresh data indicating a slowdown in European business activity cast a shadow over the timing of the central bank's rate hike, while concerns over Italian politics rose.
The euro's weakness also spilled over to the dollar, falling half a percent on the day, but broader risk aversion kept the dollar on the back foot against the franc and the Japanese yen.
The yen surged 1.2 percent against the dollar, set for its biggest daily rise in more than a year, as a wave of caution swept currency markets a day after U.S. President Donald Trump tempered optimism over progress made in trade talks with China.
Carry trades, where investors borrow in relatively low yielding currencies to invest in higher-yielding ones, came under pressure with the euro/swiss franc falling to its lowest levels since early-March.
The euro has unwound all of its rally against the franc since the Italian elections as the prospect of a spendthrift coalition government taking shape in Rome unnerved investors.
"The euro is coming up against some structural headwinds as the PMI data shows no signs of picking up while the Italian situation is also weighing on sentiment," said SEB senior currency strategist Richard Falkenhall.
DERIVATIVES
Currency derivative markets are signalling further weakness for the euro with one-year risk reversals on the single currency -- a gauge of demand for options on a currency rising or falling -- dropping to a seven-month low on Wednesday.
One year risk reversals fell to minus 0.4 after being in positive territory as recently as Monday, indicating that demand for euro puts has surged to protect downside risks, according to traders.
Morgan Stanley strategists said the euro's recent weakness could prompt overseas investors to hedge their bond and equity investments in Europe, which could add further downside pressure on the euro.
"The euro/Swiss franc cross encapsulates the growing risk premium that investors are placing on the euro in recent days and we may see further downside for now," said Alvin Tan, a currency strategist at Societe Generale in London.
While the dollar against a basket of its rivals rose 0.4 percent to 94.00, it weakened 1.2 percent and 0.6 percent against the Japanese yen and Swiss franc respectively.
Stocks tumbled and the yen gained broadly after Trump said on Tuesday he was not pleased with recent trade talks between the United States and China, the world's two biggest economies.
The euro fell to a six month low after German PMI data fell to a 20-month low indicating that economic momentum in Europe's biggest economy was faltering.
The euro/Swiss franc fell 0.7 percent to 1.1601 francs per euro, its lowest level since March 6.
The currency pair, a proxy for risk appetite within Europe, has fallen nearly 3 percent since May 14 as concerns of a fiscally profligate new coalition government in Rome has raised concerns of a showdown with the European Union.
The likelihood of a government comprised of the anti-establishment 5-Star Movement and the far-right League has pushed Italian 10-year yields up nearly 60 basis points since the start of May. The bulk of that move has been over the past week.
The safe-haven yen also rose against other currency crosses and surged against the Turkish lira, amid talk of Japanese retail investors selling the lira as stop-loss levels were hit.
The yen tends to rise in times of market turbulence since Japan is the world's largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis.
Investors are now looking to the release on Wednesday of the Fed's minutes from its most recent meeting, when it kept interest rates steady.
In its post-meeting statement issued in early May, the Fed also said inflation had "moved close" to its target and that "on a 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term."
(Reporting by Saikat Chatterjee; Additional reporting by Masayuki Kitano in SINGAPORE; Editing by Raissa Kasolowsky and Jon Boyle)
