Investing.com - Here are the top five things you need to know in financial markets on Wednesday, December 27:
1. Commodities may be set for jump in 2018
In what has been an excellent year for stocks and cryptocurrencies, traditional commodities (outside oil) have lagged in 2017 and may be set for their own rally in the coming year.
The Standard & Poor’s S&P GSCI Total Return index, which tracks 24 raw materials, is hovering near a record low valuation when compared to the S&P 500 stock index.
Hackett Financial Advisors pointed out that this valuation metric may be the sign for an impending bull market. “We now have the exact opposite condition where commodities are screaming to be bought at the expense of stocks,” Shawn Hackett said, according to a Bloomberg news report.
In what could be a confirmation of this opinion, the recommendation hit the wires just as copper reached a three-year high in overnight trading. The world’s largest producer, Chile’s Codelco, has forecast that prices may test record highs above $10,000, while UBS Group AG’s wealth management unit on Wednesday predicted further gains.
2. U.S. stocks prepare for another lethargic day of holiday trade
Wall Street looked set for another day of subdued trading between the Christmas and New Year’s holidays with many market participants waiting for 2018 to bother to return to their desks. At 6:04AM ET (11:04GMT), the blue-chip Dow futures inched up 13 points, or 0.05%, S&P 500 futures advanced 3 points, or 0.09%, while the Nasdaq 100 futures gained 9 points, or 0.14%.
European equities reopened their doors on Wednesday with a similar lack of enthusiasm as tech stocks faced pressure, returning to trade after news of weak demand for Apple’s (NASDAQ:AAPL) iPhone X.
Earlier, Asian shares closed with mixed signs. Japan’s Nikkei 225 edged forward around 0.1%, while China’s Shanghai Composite declined 0.9%.
3. Focus on U.S. consumer confidence
The main focus ahead on the economic calendar will be the Conference Board’s consumer confidence for December, released at 10:00AM ET (15:00GMT), Wednesday. The data is expected to slip slightly from November’s reading but still remain close to a 17-year high.
Traders will also keep an eye on November pending home sales out at the same time. Consensus is looking for 0.4% decline with a lack of supply at high prices expected to be the major obstacle for would-be home buyers.
Ahead of the releases, the dollar was moving lower against other major currencies on Wednesday. At 6:05AM ET (11:05GMT), the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, lost 0.25% at 92.61.
4. Oil succumbs to profit-taking ahead of U.S. inventory data
Market participants took profit in oil on Wednesday after an attack on Libyan oil pipeline a day earlier spurred solid gains.
Most of the bearish attention for oil was attributed to the gradual return of the 450,000 barrel-per-day capacity Forties pipeline system in the North Sea. Flows through Forties will return to normal early in the New Year, operator Ineos said at the beginning of the week.
In the short-term, traders will focus on U.S. inventory data with the American Petroleum Institute scheduled to produce its stockpiles later on Wednesday.
The official U.S. government data will be released on Thursday, one day later than normal due to the Christmas holiday, amid expectations for a draw of about 3.9 million barrels.
Market participants will continue to keep a close eye on stockpiles as they speculate over whether increasing U.S. shale production will offset OPEC's efforts to curb output in 2018.
U.S. crude oil futures fell 0.70% to $59.55 at 6:06AM ET (11:06GMT), while Brent oil traded down 1.19% to $65.67.
5. Bitcoin maintains 3rd day of recover, struggling with $16,000
Bitcoin recovered for a third consecutive session after last week’s plunge, but struggled to hold above the $16,000 mark on Wednesday.
After nearly a 50% decline last week, the largest alternative currency by market cap had recovered about half those losses at the time of writing on Wednesday, while traders continued to debate whether to buy, hold or sell.
Though bitcoin had managed to top the $16,000 mark on both Tuesday and Wednesday, the digital currency struggled to maintain the psychological level.
On the Bitfinex exchange, Bitcoin was last trading up $629.00 or 4.18%, to $15,672 by 6:07AM ET (11:07GMT).