Investing.com - Here are the top five things you need to know in financial markets on Wednesday, October 3:
1. European Political Tensions Ease as Italy Plans to Cut Budget Deficit
Market jitters eased on Wednesday and the euro rebounded, amid reports that Italy’s populist government plans to cut its budget deficit after next year.
Italian newspapers reported that the government will reduce its budget deficit targets for 2020 and 2021 to 2.2% and 2% respectively and stick with its plan for 2.4% for 2019.
The government originally stated it would run a deficit of 2.4% for three years, which would have breached European Union fiscal rules.
Italy has the biggest nominal debt in the EU and its promise of increasing the deficit sparked fears of a renewed financial crisis and caused a steep increase in 10-year Italian bond yields earlier this week.
2. ADP, ISM data on Tap, IMF Economic Forecasts Expected
Investors will be paying close attention to private sector employment numbers ahead of Friday’s government nonfarm payrolls report.
The ADP private-sector payrolls numbers come out at 8:15 AM ET (12:15 GMT). On average, economists expect that September payrolls rose to 187,000 from 163,000 the month before.
At 10:00 AM ET (14:00 GMT), the ISM will release its measure of September services activity. The ISM non-manufacturing PMI is expected to have ticked down to 58.1 last month from 58.5 in August.
The International Monetary Fund will also update its global economic outlook at 10:00 AM ET (14:00 GMT). IMF chief Christine Lagarde hinted in a speech on Monday that the organization could cut its growth forecast due to trade protections and high levels of debt.
“In July, we projected 3.9% global growth for 2018 and 2019. The outlook has since become less bright, as you will see from our updated forecast next week,” she said.
3. Global Stocks Rebound; Pier 1 Imports and Lennar Report Earnings
U.S. futures inched up on Wednesday, as investors looked ahead to upcoming data and concerns over Italy eased.
The S&P 500 futures rose 0.15% while Dow futures gained 0.12% and tech heavy Nasdaq 100 futures climbed 0.19% by 06:00 AM ET (10:00 AM GMT).
In earnings news, homebuilder Lennar (NYSE:LEN) reports before the bell, with analysts expecting sales to slip to $1.18 per share. After the bell, retailer Pier 1 Imports (NYSE:PIR) releases its financial results. The struggling company is expected to lose 60 cents per share on sales of about $360 million.
Trading in Europe was mixed, with Germany’s DAX in the red, while in London the FTSE 100 and in France the CAC 40 rose.
Meanwhile in Asia, mainland China stocks were closed for the week for a national holiday. In Hong Kong, the Hang Seng fell 0.13% while in Japan, the TOPIX closed 1.17% lower and the Nikkei 225 lost 0.62%.
4. Oil Prices Firm as EIA Inventory Data Awaited
Oil prices remained supported near 4-year highs amid expectations for tighter markets from next month as the U.S. prepares to re-impose sanctions on Iran.
London traded Brent crude futures were up 0.21% to $84.98 a barrel from their last close, within striking distance of the high of $82.55 reached Monday, the most since November 2014.
U.S. crude prices were steady at $75.33, hovering near Tuesday’s 4-year peaks of $75.91.
The prospect of a looming supply crunch has prompted a rally in oil prices, and analysts fear that the Organization of the Petroleum Exporting Countries and non-OPEC members, including Russia, have little spare capacity to boost output in order to offset falling supply.
Iran is OPEC’s third largest producer.
While global markets are tightening increased domestic output means that U.S. supply remains plentiful.
In its weekly report on Tuesday the API said crude stockpiles rose by 907,000 barrels last week, slightly lower than the 1.5 million barrel rise some energy analysts were predicting.
Official inventory data will be released by the U.S. Energy Information Administration at 10:30 AM ET, with analysts expecting a build of 1.98 million barrels.
5. Aston Martin Stock Falls as IPO Underwhelms
Shares in luxury automaker Aston Martin (LON:ASTM) tumbled on their market debut in London amid investor concerns over whether it can deliver on its ambitious growth plans, which include a roll-out of new models.
Aston Martin priced its shares at £19 each, giving it a market capitalization of £4.33bn ($5.63bn).
But shares fell as much as 6.5% and were down 5.26% by by 06:00 AM ET (10:00 AM GMT).
The £4.3bn valuation was short of the up to £5.1bn the automaker had sought when it set the initial price range for its listing of between £17.50 and £22.50 a share.
The listing marks the first initial public offering of a U.K. automaker in more than thirty years.
Chief Executive Officer Andy Palmer said he was nonetheless “delighted by the positive response” from investors, describing the IPO as a “historic milestone” for the company and pledged to deliver on growth plans.