Investing.com - Here are the top five things you need to know in financial markets on Tuesday, July 9:
1. Powell to kick off Fedspeak marathon
After last week’s solid U.S. employment report forced investors to scale back bets for aggressive policy easing from the Federal Reserve, the central bank’s chief, Jerome Powell, will kick off a busy week of appearances from policymakers on Tuesday.
Powell’s Tuesday speech is not expected to make too many waves with the opening remarks at a conference on bank stress testing, but markets will keep the Fed chief in the spotlight ahead of his semiannual report on monetary policy to Congress beginning on Wednesday.
Markets still price in a quarter-point cut at the Fed's July 30-31 meeting, although the jobs report reduced expectations for a half-point cut.
2. U.S.-China trade war damage spreads
German chemicals group BASF (OTC:BASFY) dominated European financial headlines after issuing a profit warning that it blamed on trade conflicts.
BASF, which sells chemicals to a broad range of industrial sectors, said it now expects earnings before interest and taxes to fall as much as 30% this year, after previously expecting an increase of up to 10%. Sales to the global automotive sector and to U.S. farmers were particularly hard hit.
The U.S. has put on ice its plans for higher tariffs on Chinese imports, but raised the political pressure on China in other ways overnight, approving the sale of around $2 billion in arms to Taiwan - a move that China’s Defense Ministry said it was firmly opposed to.
Top trade negotiators from the two countries are expected to speak by telephone this week. The Wall Street Journal suggested conversations this week would set the path for the next round of face-to-face talks in Beijing. BASF said it doesn't expect any detente any time soon.
3. Stocks remain cautious ahead of further Fed signals
U.S. futures pointed to a lower open amid fresh concerns for global growth in the light of profit warnings from BASF and others. Dow futures fell 130 points, or 0.5%, by 5:47 AM ET (9:47 GMT), S&P 500 futures lost 14 points, or 0.5%, while Nasdaq 100 futures traded down 53 points, or 0.7%.
European stocks were in the red after BASF’s profit warning dampened sentiment.
Asian shares closed lower overnight after a broker downgrade of Apple (NASDAQ:AAPL) on Monday sent the region’s suppliers reeling. Markets were also unsettled by a sharpening of rhetoric between Japan and South Korea in a spat over historical grievances.
4. PepsiCo and Levis Strauss to release numbers
Ahead of the “unofficial start” of the U.S. second-quarter earnings season - when JP Morgan (NYSE:JPM) releases on July 16- PepsiCo (NASDAQ:PEP) and Levi Strauss (NYSE:LEVI) are scheduled to release quarterly numbers on Tuesday.
Ahead of the open, the snack and beverage giant is expected to release earnings of $1.50 a share on revenue of $16.43 billion, according to estimates compiled by Investing.com.
After the market close, the jeans maker is forecast to publish an EPS of $0.13 on revenue of $1.3 billion.
5. Oil ticks higher ahead of inventory data
Despite concerns over the global economy, ongoing tensions in the Middle East kept oil prices supported on Tuesday ahead of weekly U.S. inventory data.
Iran threatened to restart deactivated centrifuges and step up its enrichment of uranium to 20%, in a move that further undermines 2015 nuclear agreement that Washington abandoned last year, but which the UN still backs.
On Tuesday’s agenda, the American Petroleum Institute will release its weekly report on U.S. crude stockpiles last week.
The U.S. Energy Information Administration will release its official government data on Wednesday amid expectations for a draw of 3.6 million barrels.
-- Reuters contributed to this report.