Here are the top five things you need to know in financial markets on Tuesday, September 6:
1. Brent oil prices slip as Saudi-Russia deal underwhelms
Brent crude prices edged lower on Tuesday, as optimism surrounding an agreement between Saudi Arabia and Russia to stabilize the oil market began to fade.Brent oil for November delivery declined 33 cents, or 0.7%, to trade at $47.30 a barrel by 5:54AM ET (09:54GMT).Brent spiked by more than 5% on Monday to touch an intraday peak of $49.40 after Saudi Arabia and Russia pledged to work together to support the market. But prices pared gains later in the session to end well off the highs as the news underwhelmed traders who had been hoping for a production freeze.Elsewhere, U.S. crude was at $44.94 a barrel, 50 cents, or 1.1%, higher than its last settlement on Friday. Nymex prices surged more than $2.00 on Monday to hit a daily peak of $46.53. Futures did not settle on Monday due to the Labor Day holiday.
2. U.S. services data eyed as markets await Fed rate hike clues
Markets looked ahead to more U.S. data to see if the economy is robust enough to withstand monetary tightening in the months ahead.The U.S. Institute of Supply Management is to release data on August service sector activity at 10:00AM ET (14:00GMT) on Tuesday. The gauge is expected to inch down 0.5 points to 55.0. Anything above 50.0 signals expansion.The data takes on extra importance after the ISM manufacturing survey published last week showed a shocking contraction in activity.According to Investing.com’s Fed Rate Monitor Tool, investors are pricing in a 27% chance of a rate hike at the Fed’s September 20-21 meeting.While expectations for a near-term rate hike have been scaled back, investors still believe the Fed will hike rates at least once before the end of the year, most likely in December.
3. Global stocks mixed with Fed rate outlook, oil in focus
U.S. stock index futures pointed to a marginally higher open on Tuesday morning, as investors returning from the long Labor Day weekend looked ahead to economic data for fresh hints on the timing of the next Fed rate hike.Meanwhile, European and U.K. stocks flipped between gains and losses in choppy mid-morning trade, as traders kept an eye on movements in the price of oil. Earlier, Asian shares ended mostly higher, though stocks in Australia declined as investors digested the latest policy decision by the nation’s central bank.
4. RBA leaves interest rates on hold
The Reserve Bank of Australia kept its benchmark interest rate on hold at 1.5% in a widely expected decision, and signaled that they would remain unchanged for the time being, citing signs of continued growth despite global headwinds.The policy meeting was the last one chaired by long-standing governor Glenn Stevens before he retires this month. Stevens will be replaced by his current deputy, Philip Lowe, who in turn is being replaced by another career RBA banker, Guy Debelle.The Aussie climbed to as high as 0.7654 against the U.S. dollar, the most since August 26. It was last at 0.7640. up nearly 0.8%.
5. Bayer raises offer to buy Monsanto to $65 billion
German pharmaceutical and crops manufacturer Bayer AG said on Monday that its negotiations with Monsanto had advanced, and that it was now willing to offer more than $65 billion to acquire the world’s largest seeds company.Bayer in a statement said that it was prepared to offer $127.50 per share in connection with a negotiated deal, up 2% from its previous offer of $125 per share.In July, Bayer raised its earlier offer of $122 per share to $125 to put Monsanto under pressure to engage further. Monsanto subsequently turned down Bayer’s $125 a share offer, but said it was open to further talks with the German company, as well as other parties.Monsanto (NYSE:MON) shares were nearly 3% higher in pre-market trade on Wall Street, while Bayer (DE:BAYGN) traded slightly lower in Frankfurt.
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