Here are the top five things you need to know in financial markets on Wednesday, September 7:
1. Markets doubt Fed rate hike this year
Disappointing sector service activity data on Tuesday pushed back expectations for the Federal Reserve (Fed) to move ahead with a rate hike this year.
Despite overnight comments from San Francisco Fed president John Williams who repeated that rates should be raised sooner, rather than later, markets remained skeptical that an increase would happen this year.
According to Investing.com's Fed Rate Monitor Tool, odds do not pass the 50% threshold until the February 2017 meeting at 52.7%. The chance for a September rate hike is at 21%.
Markets could get further indications on Wednesday from Richmond Fed chief Jeffrey Lacker and Kansas City Fed president Esther George who will testify at a hearing before the House Committee on Financial Services' subcommittee on Monetary Policy and Trade.
Both members are known for their hawkish stance but attention will most likely focus on George who is a voting member of the FOMC and was the only Fed official to vote against the July decision due to her preference to increase the rate in 25 basis points.
2. Global stocks mixed as Fed rate hike odds reduced
Asian stocks were mixed near one-year highs on Wednesday after the weak service sector data stateside dropped a 2016 Fed rate hike off the table. Japan was down 0.4% due to a stronger yen against the dollar.
Despite a weak open, European stocks managed slight gains in midday trading on Wednesday as investors looked ahead to the inflation report from Bank of England governor Mark Carney later in the session and to the European Central Bank’s policy decision on Thursday.
U.S. futures traded flat after Wall Street managed slight gains in the prior session with the Nasdaq Composite closing at an all-time high. At 6:00AM ET (10:00AM GMT), the blue-chip Dow futures slipped 8 points, or 0.04%, S&P 500 futures inched down 1 point, or 0.05%, and the Nasdaq 100 futures rose 5 points, or 0.10%.
3. Gold hovers near 2 ½-week highs while traders weigh Fed expectations
Gold slipped back from two-and-a-half week highs hit following the reduction in the odds that the Fed will return to policy normalization this year.
The slight turnaround accompanied a meager rebound in the dollar that was attempting to move off one-and-a-half week lows.
Gold for December delivery on the Comex division of the New York Mercantile Exchange inched forward 185 cents, or 0.14%, to trade at $1,352.15, by 6:01AM ET (10:01AM GMT), while U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged forward 0.12% at 94.91.
4. Apple (NASDAQ:AAPL) set to debut iPhone 7
The global press appeared to be playing down the launch of Apple’s iPhone 7 which is expected to be announced at the company’s annual product launch in San Francisco on Wednesday.
China’s online chatter was reported to be muted about the new product whose major change appeared to be the removal of the headphone jack.
Furthermore, some reports suggested that customers may well pass on the iPhone 7 in the hopes of being wowed by the next version.
5. Oil edges higher on Iran signal for cooperation ahead of inventories
Oil prices edged higher on Wednesday, as Iran signaled it was prepared to work with Saudi Arabia and Russia to prop up oil prices.
Investors also looked ahead to inventory data later in the session. Due to the Labor Day holiday the American Petroleum Institute will release their inventory data Wednesday while official figures will be released the following day.
U.S. crude oil futures gained 0.74% to $45.16 at 6:03AM ET (10:03AM GMT), while Brent oil rose 0.76% to $47.62.