Top 5 Things to Know In the Market on Wednesday By Investing.com (2024)

5 key factors for the markets on Wednesday

Investing.com - Here are the top five things you need to know in financial markets on Wednesday, December 28:

1. Oil continues rally near 17-month high as output cuts loom

Oil prices extended strong overnight gains amid thinning pre-New Year holiday trade on Wednesday, less than a week before major global oil producers begin to scale back production in line with the deal they struck last month.

Despite low volume, crude was on track to log a 9-day winning streak on Wednesday, its longest since January 2010.

OPEC members agreed to reduce output by a combined 1.2 million barrels per day starting from January 1, their first such deal since 2008.

The pact was followed by an agreement from 11 non-OPEC producers, led by Russia, to cut their supplies by 558,000 barrels a day, bringing the total to almost 1.8 million barrels per day.

Optimism over the deal continued on Wednesday ahead of a report on weekly U.S. crude inventories from the American Petroleum Institute (API) out later in the session, followed by the official report from the U.S. Energy Information Administration (EIA) on Thursday.

The reports are released one day later than normal due to last Monday’s holiday.

U.S. crude oil futures gained 0.46% to $54.15 at 6:20AM ET (11:20GMT), while Brent oil traded up 0.56% to $57.15.

2. Trump takes credit for consumer confidence in “wait-and-see” context

In a late night tweet, President-elect Donald Trump took credit for the rise in U.S. consumer confidence to its highest level in more than 15 years, as investors prepared to once again face the psychological 20,000 point level in the Dow Jones.

The blue-chip index has gained around 9% since the November 8 election day market close in what many analysts refer to as the “Trump rally” on the back of hopes that the incoming president will implement fiscal policies that will spur growth and be positive for stocks.

However, market participants have balked at the psychologically important 20,000 point level, with experts suggesting that Trump will need to follow through on expectations in order for stocks to be able to maintain the upward momentum.

“Looking ahead to 2017, consumers’ continued optimism will depend on whether or not their expectations are realized,” the report on confidence that Trump cited pointed out on Tuesday, referring to the follow-through on the post-election surge in optimism.

With many traders still on holidays, the metaphor could aptly be applied to investor sentiment for the New Year.

With the Dow still below the all-time high reached on December 20 of 19,987.63 points, U.S. futures pointed to a higher open on Wednesday. At 6:23AM ET (11:23GMT), the blue-chip Dow futures gained 0.15%, traded up 0.19% and the Nasdaq 100 futures rose 0.26%.

3. Dollar continues upward move with eyes on Trump and data

The U.S. dollar moved higher against major rivals for a second-day running on Wednesday as the prior day’s positive read on consumer sentiment continued to support the greenback.

Hopes that policy moves by the incoming Trump Administration would not only spur economic growth, but accelerate inflation, leading to further rate hikes by the Federal Reserve in 2017, led to close to a 6% rally in the dollar since the U.S. election in early November.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.31% at 103.33 by 6:26AM ET (11:26GMT).

With only the November pending home sales on Wednesday’s economic docket, investors were looking ahead to the U.S. employment report on January 6 as the major data that could shift sentiment in the American currency.

4. Toshiba crashes 20%, wiping $5 billion off stock value

Toshiba Corp. (T:6502) said late Tuesday that cost overruns at the U.S. nuclear business CB&I that it bought last year meant it could face “several billion dollars” in a write down.

The news sent its shares down 20%, hitting the Tokyo stock exchange’s daily downward limit and following a 12% drop the prior day after initial warnings were made.

The two day loss wiped out about $5 billion in the Japanese conglomerate’s stock value, taking it below its rival Sharp for the first time in seven years.

Rating agency Standard & Poor's downgraded Toshiba, already in junk territory, to B- from B, with a "negative" outlook.

5. China bank regulator official urges cut in required reserve ratio

China Banking Regulatory Commission official Yu Xuejun said on Wednesday that the requirement for the amount of cash reserves Chinese banks must hold was “very high” and insisted that it should be reduced at the “appropriate time”, according to a report from Shanghai Securities News.

The People’s Bank of China (PBOC) has kept the required reserve ratio (RRR) at 17% since last February after four reductions in 2016.

Lowering the RRR allows banks to lend out more money, increasing credit expansion.