Wednesday May 9th

9-05-2018

Dow set to rise more than 100 points as oil rallies after Iran deal fallout

U.S. stock index futures ticked higher ahead of Wednesday's open, as markets reacted to President Donald Trump's decision to pull out of the nuclear deal with Iran. At 7:07 a.m. ET, Dow Jones industrial average futures rose 123 points, indicating a higher open of 126.79 points. Nasdaq 100 and the S&P 500 futures also indicated a positive start to the session for their respective markets. The moves in premarket trade came as global markets remained jittery following news that the U.S. would be exiting the 2015 nuclear accord with Iran. Trump said Tuesday that the U.S. would be walking away from the Iran deal and that sanctions on the Middle Eastern country would be reinstated. In the run-up to the 2016 presidential election, this was a campaign promise that Trump had pledged. "We will be instituting the highest level of economic sanction. Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States," the president said. Following the announcement, countries around the world reacted differently. While some nations in the Middle East commended the move made, U.S. allies in Europe did not. The president of Iran, Hassan Rouhani, said that his country would continue to commit to the nuclear deal, according to Reuters. Oil prices rallied on the back of the news, with U.S. crude and Brent rising more than 2.8 percent Wednesday, prior to the opening bell on Wall Street. Meanwhile, U.S. crude rose 2.7 percent to $70.93 per barrel. Crude's rise lifted energy stocks, as Chevron and Exxon Mobil rose more than 1 percent in the premarket, while the Energy Select Sector SPDR Fund (XLE) gained 1 percent. In the bond market, the 10-year Treasury yield reclaimed its position above the 3 percent mark during Wednesday's morning trade, a level that recently put markets on edge. On the data front, the producer-price index rose 0.1% in April, below forecasts. The core PPI was also up 0.1%. Wholesale inventories numbers from March are scheduled for release at 10 a.m. Overseas, markets in Asia closed mixed to lower, while stocks in Europe eked out slight gains during the morning session. Japan's Nikkei 225 declined 0.44 percent, or 99.81 points, to close at 22,408.88 as most sectors traded in negative territory, although gains were seen in the mining and banking sectors. Elsewhere, South Korea's benchmark Kospi edged down by 0.24 percent to 2,443.98. Greater China markets searched for direction. Hong Kong's Hang Seng Index tacked on 0.2 percent by 3:17 p.m. Mainland markets finished the day slightly lower. The Shanghai composite slipped 0.08 percent to close at 3,158.81 and the Shenzhen composite eased by 0.09 percent. Gold prices fell to their lowest in almost a week on Wednesday, as the dollar strengthened after U.S. President Donald Trump's decision to pull the United states out of the Iran nuclear deal boosted oil prices and pushed Treasury yields higher. Raising the risk of conflict in the Middle East, upsetting European allies and casting uncertainty over global oil supplies, Trump said he would reimpose U.S. economic sanctions on Iran that had been lifted under the 2015 agreement. The dollar rose against the yen as oil prices climbed to a 3-1/2-year high, pushing yields on the benchmark 10-year Treasury note closer to 3 percent. Spot gold had fallen 0.65 percent to $1,305.16 an ounce by 0713 GMT, its lowest since May 3. U.S. gold futures for June delivery were down 0.6 percent at $1,305.70 per ounce.