Here are the top five things you need to know in financial markets on Tuesday, October 4:
1. Cable hits 31-year low after Brexit timetable released
The pound hit a 31-year low against the dollar on Tuesday as British Prime Minister Theresa May insisted on the necessity to set out a timetable for the U.K. to trigger Article 50 and proceed with negotiations to leave the European Union (EU).
“"I want to give people more certainty so we will see a much smoother process as we enter those negotiations," she told viewers in an ITV (LON:ITV) interview.
The interview came after May promised on Sunday that Article 50 would be triggered by the end of March 2017.
GBP/USD hit an intraday low of 1.2737 during European morning trade, the pair subsequently pared losses after an upbeat reading of construction sector activity at 1.2754, declining 0.63% at 6:04AM ET (10:04GMT).
2. JP Morgan CEO gives troubled Deutsche Bank a lift
Global markets continued to keep an eye on developments surrounding Deutsche Bank AG NA O.N. (DE:DBKGn) after the Department of Justice (DoJ) slapped Germany’s largest lender with a $14 billion fine.
Unconfirmed reports had indicated that a settlement with the DoJ could reduce that amount to $5.4 billion, but talks were said to be ongoing according to the Wall Street Journal and no settlement had been reached on Tuesday morning.
In Deutsche Bank’s first day of trade in Germany after the regional holiday, a day earlier, shares moved higher on a vote of confidence from JP Morgan chief executive Jamie Dimon.
"There is no reason that Deutsche Bank shouldn't get over its problems," the head of the largest U.S. bank by assets said in an interview with CNBC.
Markets have been concerned about the future of the bank, though analysts have shrugged off comparisons with the 2008 failure of Lehman Brothers.
3. Global stocks broadly higher
On the back of the drop in the pound, which makes British exports more affordable for buyers, the commodity-heavy FTSE 100 topped 7,000, hitting a 16-month high.
European stocks followed the uptrend, benefitting from easing concern over Deutsche Bank’s financial situation.
Earlier, stocks in Asia closed mostly higher with Japan leading the rise in equities as upbeat manufacturing data stateside pushed the dollar higher. Chinese stock markets remained closed for a holiday.
U.S. futures pointed to a higher open, rebounding after Monday’s slight downturn, while market participants looked forward to a couple of appearances from Federal Reserve (Fed) officials.
4. Dollar hits two-week highs ahead of Fed officials
The dollar continued to climb positions against major rivals, hitting a two-week high on Tuesday, on the back of better-than-expected manufacturing data a day earlier and comments from Cleveland Fed president Loretta Mester that suggested there was a risk the Fed would need to tighten faster if they want to target 2% inflation.
New York Fed chief William Dudley also spoke Monday warning that, in the event of a recession in the next few years, it was unlikely that the central bank could respond with the same magnitude of rate cuts.
On Tuesday, Richmond Fed president Jeffrey Lacker was scheduled to give a speech on the economic outlook at 8:05AM ET (14:05GMT), while Chicago Fed head Charles Evans was also set to deliver a speech after the market close at 8:00PM ET (2:00GMT Wednesday).
Markets are currently pricing in a rate hike in December with odds at 61.7%, according to Investing.com’s Fed Rate Monitor Tool
5. Oil moves lower on increase in Iranian exports
Oil prices retreated on Tuesday due to the latest rise in Iranian crude and condensate sales, which likely reached about 2.8 million barrels per day (bpd) in September, according to a Reuters report.
That almost matched a 2011-peak in shipments before sanctions were imposed on the OPEC producer.
U.S. crude oil futures fell 0.70% to $48.47 at 6:05AM ET (10:05GMT), while Brent oil traded down 0.61% to $50.58.