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Top 5 Things to Know in the Market on Thursday

Published 2019-05-30, 05:37 a/m
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Investing.com - Here are the top five things you need to know in financial markets on Thursday, May 30:

1. Wall Street takes a break from declines, bond yields rise

Global stocks saw mixed trade on Thursday amid ongoing trade tensions between the U.S. and China.

Chinese Vice Foreign Minister Zhang Hanhui said that Beijing was not afraid of a trade war and said the U.S. provoking trade disputes is “naked economic terrorism, economic chauvinism, economic bullying”.

Asian markets followed Wall Street lower with the Nikkei 225 and Shanghai Composite both closing down about 0.3%.

Elsewhere, the pan-European Stoxx 600 bounced off a two-and-half-month low while U.S. futures also pointed to a muted recovery. Dow futures gained 73 points, or 0.3%, by 5:35 AM ET (9:35 GMT), S&P 500 futures rose 10 points, or 0.4%, while Nasdaq 100 futures traded up 25 points, or 0.4%.

In another break from recent risk-off sentiment, U.S. bond yields were on the rise as demand diminished, although the yield on 10-year Treasuries remained below that of the 3-month note. Known as yield inversion, the phenomenon is often considered to be an indicator of recession.

Other safe-haven assets such as gold, the yen or the Swiss franc also moved lower on Thursday.

2. Uber set for first earnings report as public company

Uber (NYSE:UBER) will issue its first earnings report as a public company after Thursday’s market close, with investors hoping for some impressive number to boost the stock out of its malaise. Share performance has disappointed since the ride-sharing company went public earlier this month, sitting 11.2% below its $45-a-share IPO price.

Read more: Fact Check: Is It Worth Buying A Stock At Its IPO? - Clement Thibault

Analysts are predicting Uber will report a quarterly loss of 78 cents per share on revenue of about $3.1 billion, according to forecasts compiled by Investing.com.

In an interview with German newspaper Handelsblatt earlier this week, Uber CEO Dara Khosrowshahi confirmed that the ride-hailing company will not achieve profitability in the next year or two, but insisted that that it will eventually leave the losses behind.

Also on Thursday's earnings calendar, discount retailers Dollar General (NYSE:DG) and Dollar Tree (NASDAQ:DLTR) will report ahead of the open, while Costco Wholesale (NASDAQ:COST) will publish results post-market.

3. U.S. growth expected to be revised down

Investors will receive updated economic growth figures for the U.S. in the first quarter at 8:30 AM ET (12:30 GMT). Gross domestic product is expected to be revised down to 3.1% from an initial reading of 3.2%.

The forecast tick lower comes amid recent signs of economic weakness on a global level and fears that the escalation of the Sino-U.S. trade conflict could lead to a recession.

Although the chorus of policymakers at the Federal Reserve maintain their stance that interest rates are at the appropriate level, markets have become increasingly skeptical. Fed fund futures currently price in the probability of 25 basis point rate cut for September at above 50%.

Also on Thursday’s economic calendar, weekly jobless claims, the goods trade balance and wholesale inventories for April will be published at the same time as the GDP data, while April pending home sales will be released at 10:00 AM ET (14:00 GMT).

4. U.S. crude recovers ahead of official inventory data

Oil prices showed mixed trade on Thursday although U.S. crude advanced after the American Petroleum Institute reported Wednesday a draw of 5.3 million barrels in U.S. crude stockpiles.

Official data from the Energy Information Administration is due Thursday at 11:00 AM ET (15:00 GMT) amid expectations for a drop of 857,000 barrels.

Both reports were delayed by one day due to Monday’s Memorial Day holiday.

Oil has been under pressure as escalating trade tension between Washington and Beijing supported concern that the economic fallout could negatively affect demand.

5. DoJ wants T-Mobile, Sprint to create new carrier

The U.S. Department of Justice will reportedly require T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) to prepare for the creation of a brand new wireless carrier as a pre-condition to approve their $26.5 billion merger.

According to Bloomberg, the DoJ is concerned about the fact that the proposed merger would reduce the number of large carriers in the U.S. from four to just three. The pre-condition would avoid the DoJ’s objection to the deal diminishing competition.

Earlier this week, Reuters reported that a group of potential buyers were preparing bids for prepaid wireless brand Boost Mobile in an upcoming sale valuing the offshoot of U.S. wireless carriers T-Mobile and Sprint at up to $3 billion.

That sale is a concession required by the U.S. Federal Communications Commission and is expected to move forward once the DoJ gives the green light to the merger.

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