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Top 5 Things to Know in the Market on Tuesday

Top 5 Things to Know in the Market on Tuesday - Here are the top five things you need to know in financial markets on Tuesday, February 13:

1. World Stocks Remain on Edge

Global stock markets struggled for direction on Tuesday as investors remained on edge in the wake of last week’s steep selloff. Traders were looking ahead to Wednesday’s U.S. inflation data as a key bellwether of what’s next for markets.

Prospects of higher inflation globally have rattled investors this month and have helped drive equity market falls.

Asian markets closed mostly higher, with China's stock market leading the recovery, but Japan’s Nikkei closed lower as the yen hit a 5-month high against the U.S. dollar.

Shares in Europe were softer, held back in part by weakness in the dollar, while U.S. stock futures pointed to a lower open. Dow futures were down around 168 points, or 0.68%, while S&P 500 futures and Nasdaq Futures also fell.

2. Yen Hits 5-Month High against Dollar

The yen hit a five-month high against the dollar on Tuesday, with USD/JPY down 1.01% to 107.55 by 06:00 AM ET (11:00 AM GMT).

The combination of a recovery in risk appetite and elevated U.S. bond yields continued to drag on the dollar. Bond yields have risen amid investor fears that rising inflation could undermine the value of debt's fixed payments.

The 10 year Treasury yield fell to 2.829% from 2.857% on Monday. It hit a four-year high of 2.902% intraday Monday. If the 10-year Treasury yield reaches 3% it could trigger further market volatility, analysts say.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.47% to 89.59. The index is still up around 0.7% for the month after hitting its lowest level in more than three years.

3. Oil Rises; IEA says Global Glut Has Shrunk ‘Dramatically’

Oil prices rose on Tuesday as global stock markets stabilized after last week’s rout.

U.S. West Texas Intermediate crude futures rose 18 cents or 0.3% to $59.45 per barrel, while Brent futures advanced 28 cents or 0.45% to $62.86 per barrel.

Meanwhile, the International Energy Agency said that OPEC and its allies have almost achieved their goal of clearing an oil supply glut, but warned that their efforts could be offset by rising supplies from other producers, particularly the U.S.

The Paris-based IEA raised its forecast for oil demand growth in 2018 to 1.4 million barrels per day, from a previous projection of 1.3 million bpd.

The private American Petroleum Institute (API) was due to publish crude inventory estimates later Tuesday.

4. Bitcoin, Cryptocurrencies Turn Lower

The price of the digital currency bitcoin along with other major cryptocurrencies fell on Tuesday. Bitcoin was last down around 3.6% at $8,480 on the Bitfinex exchange.

The world's best known digital currency has been trading sideways since bouncing off lows of $6,000 reached on February 6 amid fears over a regulatory crackdown

Ethereum, the world’s second largest cryptocurrency by market cap, was down roughly 4% at $832.90.

Meanwhile, Ripple's XRP token was trading at $0.98, down almost 7.5% for the day.

5. UK Inflation Stays at Almost 6-Year High

The pound touched the day’s highs after data showing that UK inflation remained close to its highest level in six years in January, cementing expectations for a rate hike by the Bank of England in the coming months.

The annual rate of inflation was unchanged at 3.0% in January the Office for National Statistics reported. Economists had expected a reading of 2.9%.

The Bank of England took markets by surprise last week after it said interest rates would need to rise sooner and by somewhat more than the BoE had previously expected.

Markets are now pricing in as much as a 70% chance of a quarter-point rate hike by May and a roughly 50% chance of an additional rate hike later this year.

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