Modest Open Likely For US Markets: Oil Price Falls

Modest open likely for the U.S markets Wednesday after the U.S. stock index futures were looking lower on the back of the hardening of the U.S stand on trade talks with China.

At 5:30 a.m. ET, Dow Jones futures showed a negative open of more than 50 points. Futures on the S&P and Nasdaq also fell slightly. Upcoming inflation data is also impacting the investor mood.

Global trade issues hogged investor attention after President Donald Trump stated that a trade deal with China will be possible only if Beijing agrees to five “major points” without elaborating them.

Trump also criticized the Federal Reserve’s monetary policy and said the Fed has set interest rates high and had “no clue” what it is doing. The Fed is scheduled to meet next week.

Trump’s twitter comments expressed concern over the dollar’s “disadvantage” against major currencies including the euro. “The Euro and other currencies are devalued against the dollar, putting the U.S. at a big disadvantage,” Trump said.

At the data front, the Consumer Price Index for May will be released by 8:30 a.m. ET.

Lululemon, Oxford Industries, Tailored Brands and Athletica will be releasing the latest quarterly results.

Asian markets down

Shares in the Asia Pacific were down on Wednesday after cues from Wall Street showed the end of the Dow Jones Industrial Average’s winning streak.

Chinese shares slipped Wednesday with benchmark Shanghai composite plunging 0.56 percent. Hong Kong’s Hang Seng index dropped more than 1.7 percent at its final hour of trading.

Japan’s Nikkei 225 slipped 0.35 percent, while the Topix index fell 0.45 percent. South Korea’s Kospi dipped 0.14 percent and while Australia’s ASX 200 lost earlier gains and ended the session below the flat line.

European stocks slid Wednesday after the U.S. and China hardened stand in their trade war. Pan-European Stoxx 600 dropped 0.4 percent during the morning session.

Oil price plunges

Oil prices fell on Wednesday. The one percent plus downfall was abetted by a weaker oil demand outlook and surging U.S. crude inventories despite OPEC’s hint of extending supply cuts.

Brent crude futures lost 87 cents, or 1.4 percent and price of a barrel moved to $61.42 by 0231 GMT.

The U.S. West Texas Intermediate (WTI) crude futures shed 85 cents and plunged to $52.41 per barrel.

World oil demand growth for 2019 was slashed by the U.S. Energy Information Administration (EIA).

Summing up the oil market scenario, Benjamin Lu, commodities analyst at Phillips Future in Singapore, said oil prices are “struggling to retain bullish gains” as traders are cautious about the escalating geopolitical risks and “persistent weakness in the global economic backdrop.”

Gold in bounce-back mode

Gold prices surged on Wednesday after a one-week low struck in the Tuesday’s session.

The uncertainty from the U.S.-China trade war dimmed the risk appetite and shot up the appeal of safe-haven bullion.

On Wednesday, spot gold jumped 0.5 percent to $1,333.06 by 0328 GMT from $1,319.35 of the previous session. The U.S. gold futures also inched up 0.4 percent at $1,336.60 an ounce.

“Market sentiment this morning is very cautious and risk appetite has started to diminish gently, therefore we see a little bit of buying in gold,” said Benjamin Lu, an analyst with Singapore-based Phillip Futures.

“If there is no sit down between the U.S and China leadership at the G20 meeting, the yellow metal will rise further as investors start looking for a safe haven,” said Alfonso Esparza, a senior market analyst at Oanda.