Investing.com - Here are the top five things you need to know in financial markets on Tuesday, June 26:
1. Navarro Soothes Markets, But Xi Prepares To Strike Back
Peter Navarro, a top trade adviser to President Donald Trump, said Monday that investment restrictions against China and other countries are not immediately forthcoming, pushing back on fears the administration was preparing widespread restrictions on companies with heavy foreign ownership.
His comments came after news reports that had Wall Street reeling over the prospect that the U.S. could prevent companies that had at least 25% Chinese ownership from buying businesses that possessed "industrially significant technology."
Navarro insisted that markets were taking the wrong message from the reports, saying that investors instead should be focused on the White House's efforts to protect American exports and on the general progress in the economy.
Meanwhile, Chinese President Xi Jinping said that he will not hesitate to retaliate against the U.S. on trade, The Wall Street Journal reported Monday, citing sources.
“In the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek,” Xi said in the report, according to people briefed on his remarks. “In our culture, we punch back.”
Xi made the comments last Thursday to the Global CEO Council, a China-organized group of roughly 20 chief executives from mostly Western multinational companies such as Goldman Sachs (NYSE:GS) and Volkswagen (DE:VOWG_p), the Journal said.
2. U.S. Stocks Set To Take A Breather After Worst Day In Months
U.S. stock futures were little changed in early action, suggesting markets may catch their breath after suffering their worst daily decline in more than two months in the prior session.
At 5:40AM ET, the blue-chip Dow futures were up 7 points, or less than 0.1%. The S&P 500 futures and Nasdaq 100 futures also indicated modest gains at the open for their respective markets.
The largely muted moves in pre-market trade followed heavy losses on Monday, when each of the major indexes fell more than 1%, as Wall Street braced for more actions against Chinese companies by the Trump administration.
Stocks rebounded slightly in the final hour of trading, however, after Navarro’s softening of the Trump administration’s trade rhetoric.
In earnings news, homebuilder Lennar (NYSE:LEN) and fast-food-restaurant-chain Sonic (NASDAQ:SONC) are the most notable companies to report quarterly results.
Elsewhere, European shares enjoyed a modest bounce, recovering slightly after ratcheting trade tensions had sent stock markets into a spiral as investors shed risky assets. Among national indexes, Germany's exporter-heavy DAX, which has been the most sensitive to trade tensions, managed a 0.5% gain.
In Asia, Japanese shares reversed earlier losses to finish slightly higher, while Chinese equities entered a bear market - referring to a decline of 20% or more from 52-week highs - amid worries over the ongoing trade dispute between Washington and Beijing.
3. Dollar Bounces Off 2-Week Lows, As Euro, Pound Slide
Away from equities, the U.S. dollar edged higher as markets regained composure after remarks by White House trade adviser Peter Navarro helped ease investor concerns about U.S. trade policy.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was 0.3% higher at 94.26, bouncing back from an overnight low of 93.84, which was the weakest level since June 14.
The euro dipped 0.4% against the dollar to 1.1650, after edging up to a two-week high of 1.1720 overnight.
Sterling was also lower against the greenback, with GBP/USD down 0.4% at 1.3220.
Against the safe-haven yen, however, the greenback extended last session's losses to trade at 109.65, having fallen to a two-week low of 109.36 on Monday.
In the bond market, the U.S. 10-year Treasury yield were little changed at around 2.88%.
4. U.S. Consumer Confidence Data, Fed Speakers On Tap
Market players will focus on a fresh batch of U.S. economic data to gauge the health of the world's largest economy.
The S&P/Case-Shiller house price index (HPI) for April is set to be released at 9:00AM ET, followed by consumer confidence and the Richmond Fed's latest manufacturing survey at 10AM ET.
The data is unlikely to alter the outlook for monetary policy after Fed Chairman Jerome Powell reiterated last week that the case for continued gradual rate hikes remains strong.
Among central bank speakers, Federal Reserve Bank of Atlanta President Raphael Bostic is due to speak at the Birmingham Civil Rights Institute, in Alabama, at 1PM ET.
Dallas Fed President Robert Kaplan will next appear at 1:45PM ET at an event in Houston.
5. Oil Prices Tick Higher Ahead Of API Data
Oil prices ticked higher, supported by Canadian production losses and uncertainty over Libyan exports, though gains were limited from prospects of climbing OPEC supply.
Investors now turned their attention to fresh data on U.S. commercial crude inventories to gauge the strength of demand in the world’s largest oil consumer.
The American Petroleum Institute is due to release its weekly report for the week ended June 22 at 4:30PM ET (2030GMT), amid forecasts for an oil-stock drop of around 2.4 million barrels.
New York-traded WTI crude futures tacked on 11 cents to $68.19 a barrel, while Brent futures rose 28 cents to $74.83 per barrel.