By Geoffrey Smith
Investing.com --- The dollar stays on the floor, after being knocked down by Fed chair Jerome Powell on Friday. Hurricane Ida smashes Lousiana but oil prices fall after the worst-case scenario fails to materialize. China puts strict limits on minors' gaming time. Stocks are set to edge to new record highs at the open, and the EU is set to ban non-essential travel from the U.S. due to rising Covid-19 risks. Here's what you need to know in financial markets on Monday, 30 August.
1. Hurricane Ida blasts New Orleans, spares Gulf drilling rigs
Hurricane Ida battered Louisiana, bringing down much of the state’s power grid and taking some 2 million barrels a day of refining capacity offline. However, weekend rumors that it had also caused two big drilling platforms in the Gulf of Mexico, operated by Royal Dutch Shell (LON:RDSa), to become unmoored, turned out not to be true.
The hurricane is also pushing strong tidal surges up the Mississippi river, causing disruption to a major artery for U.S. trade, particularly in agricultural produce.
U.S. crude futures and Brent futures prices fell slightly on the news, after running up over 10% last week in anticipation of the storm. By 6:15 AM ET (1015), WTI was down 0.5% at $68.39 a barrel and Brent was down 0.1% at $71.65 a barrel.
2. Dollar labors after Powell's smackdown
The dollar stayed on the floor after being knocked down by Federal Reserve Chairman Jerome Powell on Friday. Risk assets continued their advance, with European equities gaining broadly.
By 6:15 AM ET, the index that tracks the dollar against a handful of advanced economy currencies was flat at 92.698, still down around half a percent from where it was when Powell started speaking at Jackson Hole. There was little impact on the euro from EU data that confirmed national surveys showing a decline in consumer and business confidence in August.
Powell had stressed that even a decision to start reducing asset purchases this year, if taken, would not mean an acceleration of the timetable for interest rate hikes. There is little on the data calendar to take attention away from that on Monday, with only pending home sales data for July and the Dallas Fed’s manufacturing survey due.
3. Stocks set to edge higher; Zoom Video earnings in focus
U.S. stock markets are set to edge higher at the open, after hitting new record highs in response to Powell’s speech on Friday, reassured that the Fed will avoid the mistake of tightening monetary policy too quickly.
By 6:15 AM ET, Dow Jones futures were up 11 points, or less than 0.1%, while S&P 500 futures were up by a similar amount and Nasdaq 100 futures were up by a little more than 0.1%. The Nasdaq had outperformed on Friday as tech names continued to profit from a move away from cyclical and value trades against a still-alarming backdrop of rising Covid-19 cases.
Stocks likely to be in focus later include pandemic winner Zoom Video (NASDAQ:ZM), which will report its earnings after the close, and medical device maker Baxter (NYSE:BAX), which The Wall Street Journal reported is in advanced talks to buy Hill-Rom (NYSE:HRC) for some $10 billion. Hilll-Rom stock was up only 3.8% in premarket, suggesting a measure of skepticism about the deal being completed.
4. China cracks down on game time for minors
Also in focus later will be the ADRs of Chinese companies, with NetEase (NASDAQ:NTES) to the fore. The gaming stock fell 3.4% after China issue draft rules with tough new limits on gaming time for minors.
Local regulators said that in future, minors will only be able to access online games for one hour on Friday evenings, as well as on weekend days and holidays.
Food delivery company Meituan's ADRs (OTC:MPNGY) will also be in the spotlight later after it reported a quarterly loss that was narrower than forecast, but warned about the possible impact of future regulation.
5. EU set to ban non-essential U.S. travel as Delta wave reaches new highs
The European Union is set to ban non-essential travel from the U.S. into Europe, in response the rising risk of Covid-19 transmission, according to The Wall Street Journal.
The news hit European airline and travel stocks in early trading but U.S. airline stocks have not yet reacted.
The number of Covid-19 deaths in the U.S. averaged over 1,200 last week, the highest since March, while the number of new cases hit its highest since January. There are however signs that the infection curve in the U.S. may be flattening as the country’s vaccination drive slowly grinds into higher gear.