Top 5 Things To Know In The Market On Thursday

Aug 09, 2018

Here are the top five things you need to know in financial markets on Thursday, August 9:

1. U.S., Japan Hold First Bilateral Trade Talks

While markets are still on edge over the brewing trade war between the United States and China, traders expect today's main event to take place in Washington, where Japan will enter talks seeking to avert steep tariffs on its car exports and fend off U.S. demands for a bilateral free trade agreement.

U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe agreed in April to set up a new framework to discuss "free, fair and reciprocal" trade that will be led by U.S. Trade Representative Robert Lighthizer and Japanese Economy Minister Toshimitsu Motegi.

Japan's trade surplus with the U.S. may be a potential target for Trump's trade policies.

Trade-war fears have been simmering for months, keeping market gains in check with investors jittery over the prospects of further escalation in tensions between the U.S. and its major trading partners having an impact on global economic growth.

China on Wednesday imposed additional tariffs of 25% on $16 billion worth of U.S. goods, in retaliation to planned extra duties from the U.S. on Chinese products set to be enforced from August 23.

2. Sanctions Rock Currency Markets

Sharp movements in currency markets were in focus, as investors reacted to fresh U.S. sanctions on Russia for its role in the poisoning of a former security agent in the U.K. as well as an ongoing U.S.-Turkey human rights dispute.

The Russian rouble retreated to its lowest since November 2016, weakening beyond the psychologically important 65 per dollar threshold, after Washington said it would impose fresh sanctions on Moscow over the Kremlin's alleged involvement in the poising of former Russian spy Sergei Skripal with the chemical agent Novichok earlier this year in the rural English town of Salisbury.

According to State Department spokeswoman Heather Nauert, the sanctions will go into effect on or around August 22.

Elsewhere, the Turkish lira touched a fresh record low against the dollar, weakening more than 3% after a Turkish delegation met U.S. officials to try to resolve disputes between the two NATO allies as part of an ongoing spat over the arrest of evangelical pastor Andrew Brunson.

President Trump has repeatedly lashed out at Turkey over the continued detention of Brunson, whom Turkish officials accuse of terrorism for his part of the failed 2016 coup.

3. U.S. Stock Futures Point To Flat Open

U.S. stock futures pointed to a muted open, as investors focused on the latest batch of corporate earnings, while continuing to monitor global trade and geopolitical tensions.

At 5:35AM ET, the blue-chip Dow futures were up just 4 points, or less than 0.1%. The S&P 500 futures and tech-heavy NASDAQ 100 futures also indicated a flat start to their respective trading sessions.

Stocks closed mixed on Wednesday, but the Nasdaq managed to notch its longest winning streak since March, as shares of Amazon (NASDAQ:AMZN) rose to a record-high.

Elsewhere, in Europe, the region's major bourses were mostly lower in mid-morning trade, with almost every sector in the red. Germany's DAX was the worst performer, slipping 0.6%.

Earlier, in Asia, stocks in the region closed mostly higher, as a rally in Chinese stocks helped offset the latest escalation in the Sino-U.S. trade war.

Shanghai blue chips climbed 2.7% amid talk of possible government support for home-grown technology companies, just the latest in a series of growth boosting measures rolled out by Beijing as the trade dispute worsens.

4. Media Earnings In Focus

Dozens of companies are expected to release earnings today in one of the last big waves of the earnings season.

Most of the focus will fall on Viacom (NASDAQ:VIA) - the parent company of MTV, Nickelodeon and Paramount - which reports ahead of the opening bell.

Analysts on Wall Street expect earnings per share of $1.07 on revenue of $3.27 billion.

The company has been touting its turnaround effort for months, and will likely focus on that during the post-earnings conference call. But investors will also keep a close ear on anything CEO Bob Bakish might say about its corporate cousin, CBS (NYSE:CBS).

CBS chief Les Moonves faces accusations of sexual harassment, casting his future in doubt.

And after hours, News Corp. (NASDAQ:NWSA) and Tronc (NASDAQ:TRNC) will report earnings.

Other high-profile names reporting Thursday include, Dropbox (NASDAQ:DBX), Canada Goose (NYSE:GOOS), Trade Desk (NASDAQ:TTD), Universal Display (NASDAQ:OLED), Planet Fitness (NYSE:PLNT), and Norwegian Cruise Line (NYSE:NCLH).

Wall Street has reached the tail end of the latest corporate earnings season. Nearly 90% of S&P 500 companies have released their calendar second-quarter results. Of those companies, around 77% have reported better-than-forecast quarterly profits, according to FactSet.

5. PPI Data Ahead

Today's calendar will bring investors the July data on producer prices at 8:30AM ET. The data is expected to show prices rose 3.4% over the prior year, as signs of inflation pressures building in the economy continue to add up.

Also on the calendar are initial jobless claims at 8:30AM ET. Economists expect just a slight rise in weekly first-time claims from the week before.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was a shade higher at 95.10.

In the bond market, U.S. Treasury prices were little changed, with the benchmark 10-year yield standing at 2.96%, while the Fed-sensitive 2-year note holding at around 2.67%.