Investing.com - Here are the top five things you need to know in financial markets on Tuesday, September 6:
1. Dollar drops, gold supported amid North Korea tension
The dollar remained lower against a basket of the other major currencies on Wednesday amid heightened tensions in the Korean peninsula.
Investors remained on edge after South Korea’s President Moon Jae-in warned Wednesday that the crisis on the Korean peninsula risks becoming “uncontrollable”, following Sunday’s nuclear test by North Korea.
Russia’s Vladmir Putin joined in the international condemnation of Pyongyang’s actions on Wednesday but maintained the stance that a solution can only be reached via diplomatic measures.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dropped 0.11% at 92.18 by 5:54AM ET (9:54GMT).
The geopolitical tension has kept global equities on edge, with the Dow tumbling more than 200 points on its first day of trading after the Labor Day holiday, as investors rotate into safe haven assets.
Gold prices held just below their highest level in around a year on Wednesday, drawing support from lingering tensions on the Korean peninsula.
Gold for December delivery on the Comex division of the New York Mercantile Exchange inched forward 50 cents, or 0.03%, to trade at $1,345.00 by 5:55AM ET (9:55GMT).
2. ISM non-manufacturing PMI and Beige Book ahead
After a slew of data in the prior session showed that service sector activity from China to Europe generally remained robust in August, the U.S. will step up to the plate with the release of the ISM non-manufacturing purchasing managers’ index (PMI) at 10:00AM ET (16:00GMT).
Economists forecast the expansion in the service sector to pick up with the reading rising to 55.4 from the prior 53.9.
Also on the docket, the Federal Reserve will release its Beige Book, that shows the state of economic conditions in each of the 12 Fed districts, at 2:00PM ET (18:00GMT).
3. Global stocks mostly lower as North Korea still weighs
Global equities traded broadly lower on Wednesday as market nerves continued to rattle over geopolitical tensions.
U.S. futures pointed to a flat open on Wednesday as the stocks gathered breath after the prior session’s slide that wiped more than 200 points off the Dow. At 5:56AM ET (9:56GMT), the blue-chip Dow futures inched up 9 points, or 0.04%, S&P 500 futures edged forward 1 point, or 0.02% while the Nasdaq 100 futures traded up 11 points, or 0.18%.
Elsewhere, European bourses underwent a third day of losses as weak German factory orders added to geopolitical tension and investors showed caution one day ahead of the European Central Bank’s monetary policy decision. At 5:57AM ET (9:57GMT), the European benchmark Euro Stoxx 50 lost 0.15%, Germany’s DAX slipped 0.03%, while London's FTSE 100 fell 0.54%.
Earlier, Asian shares closed mostly lower as Japan’s Nikkei 225 and South Korea’s KOSPI remained on alert. China’s Shanghai Composite managed to pocket minimal gains.
4. Oil continues to move higher as attention shifts to inventories
Oil prices continued to drift higher on Wednesday, after rallying around 3% in the prior session, as investors looked ahead to weekly data from the U.S. on stockpiles of crude and refined products to weigh what the impact of Harvey was on supply and demand.
Industry group the American Petroleum Institute is due to release its weekly report at 4:30PM ET (20:30GMT).
Official data from the Energy Information Administration will be released Thursday, amid forecasts for an oil-stock jump of around 4.7 million barrels.
The reports come out one day later than usual due to the U.S. Labor Day holiday on Monday.
U.S. crude oil futures gained 0.47% to $48.89 at 5:58AM ET (9:58GMT), while Brent oil traded up 0.86% to $53.84.
5. Bank of Canada rate decision
The Bank of Canada's interest rate decision is due at 10:00AM ET (14:00GMT) on Wednesday, with most experts expecting the central bank to hold its benchmark rate at 0.75%.
The BoC hiked rates for the first time in seven years at its previous meeting in July and left the door wide open to further moves.
Investors are fully pricing in at least one more rate increase by the end of this year, and at least one more in 2018.
The odds of a hike as early as this week jumped to 41% after data late last month showed Canada's economy accelerated at a 4.5% pace in the second quarter, tops among Group of Seven nations.
Most economists, however, still expect the next rate hike to come at the bank's October meeting.
While waiting for the data, USD/CAD edged forward 0.07% to 1.2385 by 5:59AM ET (9:59GMT).