June 22, 2017
May heads to Europe, pressure on oil continues and opposition builds to Yellen’s reappointment. Here are some of the things people in markets are talking about today.
May has her say
British Prime Minister Theresa May is in Brussels today for her first summit since this month’s disastrous election. She is expected to outline how the U.K. proposes to deal with the thorny issue of EU citizens’ rights after Brexit. If she is unable to achieve a deal on this issue it would jeopardize the overall negotiating process, delaying the discussion of a post-Brexit trade accord. On the domestic front, her legislative program has become more complex as officials admit that lawmakers in Scotland could be given a separate vote on the prime minister’s plans for leaving the EU.
A barrel of West Texas Intermediate for August delivery was trading at $42.53 at 5:25 a.m. Eastern Time, unchanged for the session, as oil held its slide into a bear market. The drop in crude prices is pushing down the shares of energy producers, with a wave of equity analysts downgrading dozens of oil-industry stocks yesterday, as they take an increasingly pessimistic view of the world’s ability to soak up the supply glut. The oil-price cloud does have one silver lining — or in this case a gold lining — as a rally in the price of the precious metal is seen continuing while inflation expectations fall.
The prospect of Janet Yellen having a second term at the helm of the Federal Reserve is facing resistance from some advisers to President Donald Trump, according to two officials who spoke to Bloomberg on condition of anonymity. With her current term running until February, Yellen is probably more concerned at the moment with policy issues, particularly the continued refusal of inflation to rise to levels which would allow tightening.
Overnight, the MSCI Asia Pacific Index rose 0.4 percent, gaining for the first day in three as technology shares advanced, while Japan’s Topix Index slipped 0.1 percent. In Europe, the Stoxx 600 Index was 0.5 percent lower at 5:45 a.m. as the selloff in energy shares continued, with miners resuming declines. U.S. stock-market futures pointed to a drop at the open.
It’s Thursday, so this week’s initial jobless-claims data for the U.S. is due at 8:30 a.m., with expectations for a slight rise to 240,000 for the period. In Congress today, Federal Reserve Governor Jerome Powell and acting Comptroller of the Currency Keith Noreika are likely to tell lawmakers that both their agencies are open to easing Volcker Rule restrictions. This afternoon the results of annual Fed stress tests are revealed, with all of the nation’s 34 largest lenders expected to pass for the first time since the examination was introduced, in a result that should prove a boost to dividend payouts.