Here are the top five things you need to know in financial markets on Monday, August 27:
1. NAFTA Deal Likely "Hours" Away
With summer drawing to a close, trade-related headlines could be the
main driver of sentiment in the week ahead.
U.S. and Mexican trade negotiators are "hours" away from squaring away bilateral differences on the North American Free Trade Agreement (NAFTA), Mexican Economy Minister Ildefonso Guajardo told reporters as he entered the offices of the U.S. Trade Representative.
"We've continued making progress," Guajardo said.
Talks are set to resume at 9:00AM ET in Washington.
President Donald Trump tweeted on Saturday morning that the United States' "relationship with Mexico is getting closer by the hour. Some really good people within both the new and old government, and all working closely together....A big Trade Agreement with Mexico could be happening soon!"
The U.S. and Mexico have been holding bilateral talks aimed at resolving their differences before bringing Canada back to the talks.
All three governments are hoping to reach a new NAFTA agreement in principle by the end of August.
2. U.S. Stocks Set to Extend Push into Record Territory
U.S. stock index futures ticked higher, suggesting Wall Street would extend its push into record territory, after a market-friendly speech by Fed Chairman Powell and signs of progress on a U.S.-Mexico NAFTA trade deal.
The blue-chip Dow futures were up 75 points, or around 0.3%, at 5:40AM ET, the S&P 500 futures tacked on 7 points, or around 0.3%, while the tech-heavy Nasdaq 100 futures indicated a gain of 32 points, or roughly 0.4%.
Stocks ended higher on Friday, with the S&P 500 and Nasdaq composite indexes closing at record highs. The Dow meanwhile was still around 3% away for its all-time high.
A number of earnings reports are expected this week as the quarterly reporting season winds down.
The retail sector will remain in focus with Best Buy (NYSE:BBY), Tiffany (NYSE:TIF), Dick’s Sporting Goods (NYSE:DKS), PVH (NYSE:PVH), Kroger (NYSE:KR), Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), Lululemon (NASDAQ:LULU), and Ulta Beauty (NASDAQ:ULTA) all set to release earnings.
Other S&P 500 members scheduled to report earnings this week include Salesforce.com (NYSE:CRM), H&R Block (NYSE:HRB), and HP Enterprise (NYSE:HPE).
Elsewhere, in Europe, the majority of the region's major bourses were higher in mid-morning trade, with most sectors in positive territory. British markets were closed for a public holiday.
Earlier, Chinese markets led gains in a mostly positive trading session across Asia, after the country's central bank reintroduced a policy adjustment aimed at supporting the yuan, which hit a two-and-a-half-week high against the U.S. dollar.
3. Tesla Sinks After Musk Abandons Buyout
Tesla (NASDAQ:TSLA) shares looked set for a big down-day as investors reacted to Chief Executive Elon Musk's decision to abandon a proposed $72 billion buyout to take the electric car maker private.
Musk said in a blog post late on Friday that his decision to scuttle the proposed deal was motivated in part by existing Tesla shareholders who said they wanted the company to remain publicly-traded.
Tesla's shares, already down nearly 10% from their level on Aug. 7, just before Musk tweeted that he had "funding secured" for a buyout at $420 a share, fell 4.4% in pre-market trade to $308.60.
Both Musk and Tesla face investor lawsuits and a U.S. Securities and Exchange Commission investigation into the accuracy of Musk’s tweet.
4. Dollar Stabilizes After Powell
Away from equities, the U.S. dollar was little changed against a basket of the other major currencies, stabilizing after remarks from Fed Chair Jerome Powell last week sent the greenback lower.
At a closely watched symposium at Jackson Hole, Wyoming, the Fed chairman on Friday emphasized the central bank's push to raise interest rates despite President Donald Trump's recent criticism of higher borrowing costs.
Powell made the case that gradual rate hikes are the best way to protect the U.S. economic recovery and keep job growth as strong as possible and inflation under control.
His comments were also seen to have disappointed some dollar bulls hoping for a more hawkish message.
The U.S. dollar index held steady at around 95.10, after slipping more than 0.5% in the previous session.
In the bond market, the two-year yield edged up as the Fed stuck to its rate hike trajectory, while the central bank's restrained inflation view anchored the 10-year yield, resulting in the flattest yield curve since 2007.
5. Oil Dips As Oversupply Concerns Remain
In commodity markets, oil prices fell as investors remained on edge about potential oversupply, despite signs that U.S. sanctions on Iran could curb output.
Concerns the U.S.-China trade dispute will erode global economic growth and hurt demand for crude also weighed.
International Brent crude oil futures were at $75.78 per barrel, down 34 cents from their last close.
U.S. West Texas Intermediate WTI crude futures were down 31 cents at $68.41 a barrel.
Gold also edged lower, with spot gold trading at $1,204.95 per ounce.
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