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Top 5 Things to Know in the Market on Wednesday

Investing.com -- Hopes for a limited trade deal spark a modest bounce in stocks, while Turkey gets ready to invade Syria and the Federal Reserve prepares to release the minutes from its last policy meeting. Here's what you need to know in financial markets on Wednesday, 9th October.

1. Trade hope springs eternal

China remains open to a partial trade deal with the U.S., despite a spate of interventions over the last couple of days that had seemed to banish any hope of meaningful progress, according to Bloomberg.

China would accept a limited deal as long as no more tariffs are imposed by President Donald Trump, including two rounds of higher duties set to take effect this month and in December, it cited an official as saying. In return, Beijing would offer to buy more U.S. agricultural products, albeit without conceding anything major on issues like subsidies for state-owned firms.

The offshore Chinese yuan strengthened to an intraday high of 7.1348 to the dollar on the news, but further gains will depend on whether the U.S. signals greater willingness to accept a narrow deal in the short term. President Donald Trump said at the weekend the prospect didn’t interest him.

2. Stocks set to open higher

The choppy week for U.S. stock markets looks set to continue, with major indices poised to regain around two-thirds of Tuesday’s losses at the opening – mostly on the back of the positive noises from China.

By 6 AM ET, Dow futures were indicated up 201 points or 0.8%, while S&P 500 Futures were up 27 points or 0.9% and Nasdaq 100 Futures were up 1.1%.

It’s a quiet day for earnings and economic data, although the Federal Reserve will release the minutes of its latest policy meeting at 2 PM ET (1800 GMT).

Yields on U.S. Treasury bonds were a fraction higher as the appetite for risk returned. The 2-Year yield rose two basis points to 1.44%, while the 10-Year rose by the same to 1.56%.

3. Johnson & Johnson (NYSE:JNJ) hit with $8 billion Risperdal verdict; Levi's beats expectations

Johnson & Johnson (NYSE:JNJ) was ordered by a Philadelphia jury to pay a Maryland man $8 billion because its antipsychotic drug Risperdal caused him to grow enlarged breasts.

It was the biggest award to date among the 13,000 suits that J&J faces over Risperdal. While it’s unlikely to be upheld on appeal, it’s a new source of legal risk for a company that has already had to pay heavily for issues relating to its opioid drugs and its talc baby powder. The shares fell 1.5% in after-hours trading on the news.

Also in focus, Levi Strauss (NYSE:LEVI) shares may be due a pop at opening after the company beat expectations with its third-quarter earnings after the bell on Tuesday.

4. Turkish troops enter Syria

Turkish forces and Syrian rebel allies are set to cross the border into Syria “shortly”, newswires quoted a Turkish official as saying, in an operation that could open a new chapter in Syria’s ruinous eight-year-old war.

The move has put pressure on the Turkish lira, with traders mindful that President Donald Trump threatened to “obliterate the Turkish economy” in his “great and unmatched wisdom” if the country’s forces attacked Syrian Kurds, which had enjoyed the protection of the U.S. until this week, when Trump announced he would pull U.S. forces out of the country.

The lira, which weakened to within touching distance of a three-month low on Tuesday, edged lower again on Wednesday.

5. Crude inventories data due

The U.S. government will release its weekly update on U.S. oil supplies at 10:30 AM ET. An increase of 1.4 million barrels in crude inventories is expected by analysts.

Last week’s surprisingly strong increase of 3.1 million barrels had refocused the market on the issue of weakening global demand as the world economy slows down. A further warning may be on the cards today, given that the American Petroleum Institute’s data, released Tuesday, showed a 4.1 million barrel increase in stocks.

By 6 AM ET, revived hopes for a U.S.-China trade deal had helped U.S. crude futures recoup the losses they suffered on the API data. WTI Futures were at $53.16 a barrel, up 1.0% on the day, while Brent futures were up 1.0% at $58.80.

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