Opening Bell: Oil Higher; Futures Slip, Russian Markets Spiral Lower

Key Events

European shares slid in Wednesday's early trading following an Asian session in which most local exchanges fell, while Treasury yields climbed. US futures, including S&P 500 Futures and futures for the NASDAQ 100 are also currently in retreat. Futures for the Dow Jones 30 , however, are heading higher as of this writing. The US dollar has extended its decline for a fifth straight day, ahead of US inflation data and the release of the FOMC Meeting Minutes.

S&P 500 futures failed to cross above the neckline of an H&S bottom in the 4-hour chart.

Global Financial Affairs

The STOXX Europe 600 slid from a three-week high, with most sectors in the red. The UK's Tesco (LON:TSCO) outperformed with a 3.7 percent surge after the supermarket chain beat earnings guidance.

The broad descent visible right now follows an Asian session in which most equities opened higher but then saw exchanges retreat, including Japan's TOPIX and South Korea's KOSPI. Australia's S&P/ASX 200 also edged higher intraday, but failed to hold on to gains and tumbled to a lower close.

China's two key benchmarks bucked the trend. The Shanghai Composite as well as Hong Kong's Hang Seng opened higher and each kept climbing through the entire session. the comeback of Chinese stocks is even more noticeable considering they stand to lose the most from a trade war with the US, the Asian nation's biggest trading partner.

This morning's China session becomes even more interesting in light of PBOC Governor Yi Gang providing additional details today about China liberalizing foreign access to its financial markets by year-end on the heels of President Xi Jinping's conciliatory Boao Forum address yesterday. According to the Wall Street Journal:

Mr. Yi told a forum of political and business leaders that by the end of June, the government will remove foreign ownership caps on Chinese banks and permit foreign securities and life insurance companies to hold majority stakes in their Chinese counterparts. Mr. Yi said foreign ownership caps on Chinese securities and life insurers—which are currently being raised to 51% from 49%—will be totally abolished in three years.

Does morning's failure to build on Tuesday's strong US stock performance indicate that bulls are losing steam? Yesterday US equities pared losses they had posted in the previous two sessions, when they took a hit from renewed trade tensions and the FBI raid on the premises of US President Donald Trump's personal lawyer. Where do global markets go next?

There is no scarcity of risk factors that have the potential to turn investors more cautious: the ongoing investigation into the US president for collusion with Russia and illegal use of campaign funds that's also now focused on his lawyer; the possibility of a US military strike in Syria which was magnified by the US's adding stronger sanctions against Russia, Syria's ally. The added sanctions sent Russian financial markets into a downward spiral—which could become even more combustible given the current geopolitical climate—with Russian bonds, stocks and the ruble extending a furious selloff today.

Lastly, though no less significant, US inflation concerns are bubbling beneath the surface. They'll take center stage later today when fresh CPI figures are released.

Will inflation positively correlate with Tuesday's producers prices data, rising more than expected? Fears of a faster pace of tightening from the Fed were the catalyst for the repeated equity selloffs seen after late January's record stock performance. CPI is expected to have advanced March 2.4 percent from a year ago, while core inflation, excluding volatile food and fuel prices, is forecast to have climbed 2.1 percent.

This morning, China's factory PPI posted a 3.1 percent increase in March, dropping from February's 3.7 YoY figure. Also, the country's 2.1 percent YoY CPI figure, down from February's 2.9 percent gain, missed the 2.6 estimate. Core CPI, excluding volatile food and energy, climbed 2.0 percent, also falling from February's 2.5 percent.

All this suggests a slower path to economic growth for the Asian economic power. However, it may not necessarily mark a negative development, if it served to push China towards a more accommodative negotiation stance with the US.

The Dollar Index swung from a 0.05 percent gain to a 0.14 percent loss, to settle at 89.56, 0.02 percent lower than yesterday's close. While the USD found resistance at the 90+ range top, it may prove to be developing an Ascending Triangle bottom, should the uptrend line since mid-February hold, and conclude with a decisive upside breakout above 91.00.

WTI crude slipped earlier today, but is currently pushing past $66.

Aluminum advanced for a fifth straight day, heading for its highest close since January, after major commodity exchanges said they’ll stop accepting metal from Rusal (MCX:RUAL) in the wake of fresh US sanctions on Russia. Technically, the price must exceed the December 29, 2290.50 peak, to resume an uptrend.

Up Ahead

• Following China's disappointing inflation data, will the US CPI drop from 0.2 percent MoM more than to the estimated 0.00 percent, and will it miss the estimated increase to 2.4 percent from 2.2 percent YoY?

• Minutes from the Fed's latest monetary policy meeting: will there be any insight into the US-China trade dispute; will FOMC member Robert Kaplan have changed his mind that the issue won't be resolved anytime soon, in stark contrast to market opinion?

• Facebook (NASDAQ:FB) CEO Mark Zuckerberg testifies today at his second hearing before the US Congress.

Market Moves

Stocks

• The STOXX Europe 600 Index sank 0.3 percent.

• Futures on the S&P 500 Index dipped 0.5 percent.

• The MSCI All-Country World Index decreased less than 0.05 percent.

• The UK’s FTSE 100 dipped 0.3 percent, the biggest decrease in more than a week.

• Germany’s DAX sank 0.3 percent.

• The MSCI Emerging Market Index declined 0.1 percent.

• The MSCI Asia Pacific Index fell 0.1 percent, the largest fall in a week.

Currencies

• The Dollar Index swung from a 0.05 percent gain to a 0.14 percent loss, to settle at 89.56, 0.02 percent lower than yesterday's close.

• The euro increased 0.2 percent to $1.2376, the strongest in more than two weeks.

• The British pound rose 0.2 percent to $1.4204, the strongest in more than two weeks.

• The Japanese yen gained 0.2 percent to 107.01 per dollar.

Bonds

• The yield on 10-year Treasuries fell one basis point to 2.79 percent.

• Germany’s 10-year yield dipped one basis point to 0.51 percent.

• Britain’s 10-year yield decreased one basis point to 1.402 percent.

Commodities

• WTI crude dipped 0.5 percent to $65.19 a barrel.

• Copper declined 0.6 percent to $3.12 a pound, the biggest fall in a week, after reaching the resistance of its broken uptrend line since late October 2016.

• Gold climbed 0.4 percent to $1,345.09 an ounce, the highest level in more than two weeks.