Investing.com - Here are the top five things you need to know in financial markets on Wednesday, August 7:
1. China sets yuan midpoint below 7 per dollar
The Chinese yuan stabilized as the People's Bank of China set the official midpoint reference for it at 6.996 to the dollar.
That's a fraction stronger than the 7 per dollar psychological handle that triggered the U.S.'s decision to label the world’s second-largest economy of being a currency manipulator. However, the dollar continued to trade over 7 yuan in both the mainland and offshore markets, albeit with only marginal gains on the day.
Trump has accused Beijing of purposefully letting the yuan depreciate to gain an unfair trade advantage, as a weaker currency makes Chinese exports cheaper in international markets. China rejects the accusation and says the recent weakening is market-driven and fundamentally justified.
2. 10-year Treasury in spotlight
With no major U.S. economic reports on the docket and the yield on the U.S. 10-year Treasury spiraling down to nearly a three-year low, markets will focus on an appearance Chicago Fed President Charles Evans and an auction of U.S. Treasuries.
Markets will look to Evans’s appearance for potential hints on his outlook for the future path of monetary policy, after his St. Louis counterpart, James Bullard, said Tuesday he feels further rate cuts “may be desirable” later this year.
Read more: 3 Stocks to Consider as Fed Rate Cuts Resume - Jesse Cohen
The U.S. Treasury is set to auction $27 billion in 10-year notes as the yield dropped to 1.66%, its lowest level since Oct. 2016.
3. Disney tumbles but U.S. futures move higher
Shares in Walt Disney (NYSE:DIS) sank nearly 4% in premarket trade after it reported a steeper-than-expected decline in quarterly profit, which it blamed on heavy investment in digital media platforms meant to compete with Netflix (NASDAQ:NFLX).
Disney said it would offer a $13-per-month bundle of its three streaming services -Disney+, sports service ESPN+, and Hulu- starting in November.
Despite the drop in the Dow component’s share price, U.S. futures pointed to a slightly higher open in what would be its second day of recovery from its worst daily performance in 2019.
Other positive earnings reports released after Tuesday’s close from the likes of Hertz Global (NYSE:HTZ), Weight Watchers (NASDAQ:WW), Match Group (NASDAQ:MTCH) or Microchip Technology (NASDAQ:MCHP) helped buoy market sentiment in the absence of new developments in the U.S.-China trade dispute.
CenterPoint Energy Inc (NYSE:CNP), NRG Energy (NYSE:NRG) and Teva Pharma (NYSE:TEVA) are among companies reporting ahead of the open while AIG (NYSE:AIG), Booking (NASDAQ:BKNG) and Fox (NASDAQ:FOXA) will release after the market close..
4. New Zealand, India, Thailand add to wave of global central bank easing
Three more central banks loosened their monetary policy as fears grow over the broadening fallout of the U.S.-China trade dispute on the global economy.
New Zealand’s central bank (RBNZ) shocked markets overnight with an unexpectedly large half-percent cut to interest rates. The RBNZ not only dropped rates to a record low 1% but forecast the possibility of an additional cut by the end of the year, sending the country’s currency to a 10-year low.
The Reserve Bank of India meanwhile cut interest rates for a fourth straight meeting, taking advantage of mild inflation to expand its effort to boost an economy growing at its slowest pace in nearly five years.
The Bank of Thailand also unexpectedly cut its benchmark interest rate for the first time since 2015, reversing a 25 basis-point hike in December.
5. Oil slips on lingering trade worries ahead of inventory data
Oil prices moved lower on lingering concerns that the Sino-U.S. trade conflict will continue to hurt global growth, lowering demand for crude.
Market focus will center on weekly data that is expected to show that U.S. crude stockpiles in the U.S. fell for an eighth straight week.
Official government data from the Energy Information Administration will be released at 10:30 AM ET (14:30 GMT), amid forecasts for an oil-stock draw of around 3.3 million barrels. A separate report from the American Petroleum Institute showed a decline of 3.4 million barrels.