By Jeffrey Smith and Anna Beatrice Bartolo
Investing.com – First quarter growth expected today, 28th, is expected to show a sharp slowdown driven Corona virus disease. Earnings season in the US continues to pick up, with data from Meta Platforms last night (NASDAQ:: (SA :)), which owns Facebook, ensuring a positive start to the day. The Larva (NYSE 🙂 (SA 🙂 also posted strong results, but the main event is coming later in the day with Apple (NASDAQ 🙂 (SA 🙂 and Amazon (NASDAQ 🙂 (SA :)). The Bank of Japan pushed interest rates to a 20-year low as they again refused to act in the face of rising inflation. However, the Swedish central bank began a long cycle of raising interest rates. The standoff between Europe and Russia over gas shipments deepened as Italy’s Eni succumbed to pressure from the Kremlin to pay the ruble.
Here’s what you need to know about the financial markets on Thursday, April 28.
1. Omicron should affect the GDP of the United States
The US is expected to post a sharp slowdown in economic growth in the first quarter, as a result of the resurgence of Covid-19 in the new micron strain, which has kept much of the economy on hold for longer than expected earlier in the year.
The numbers, expected at 9:30 a.m., are expected to show growth slowing to an annualized rate of 1.1% from 6.9% in the fourth quarter. If the past is any guide, the numbers will likely be revised upward in subsequent readings because traditional data collection methods have not fully adapted to changes in business practices during the pandemic.
At the same time, the Labor Department will release claims numbers for the week. There have been few signs of slackening in the labor market in recent weeks, amid widespread evidence that companies are struggling to hire new workers.
2. The Bank of Japan took the yen to a 20-year low
The Bank of Japan pushed the yen to a 20-year low, redoubling its efforts to keep long-term government bond yields well below the inflation rate.
The Bank of Japan pledged after a routine policy meeting to continue buying unlimited amounts of 10-year government bonds to defend the implied yield ceiling of 0.25%, signaling its determination to focus on supporting the fragile economy. It rose 1.3% to break the 130 yen level for the first time since April 2002.
It also caused the US dollar, which measures the price of the dollar against a basket of advanced economies, to fall to half a percent from its highest level in 20 years. The dollar also continues to rise against emerging currencies: it rose 0.8% against Chinese foreign currencies to an 18-month high.
However, it was not all in one direction. The Swedish krona rose across the board, with Riksbank increasing its repo rate by 0.25% indicating a series of increases over the next two years. The Euro remained under pressure after data indicating that core inflation remained strong in April.
3. Apple and Amazon earnings are the highlight of a busy day
Facebook’s owner Meta Platforms has put momentum back into US stocks with a quarterly report that showed a surprisingly strong increase in user numbers, which was taken as a sign that its Instagram Reels feature is reasonably capable of competing with TikTok. However, annual revenue growth of 6.6% was still the slowest in its history as a listed company. Meta shares rose 16.7 percent ahead of the market.
Qualcomm stock also performed well ahead of the market, rising 7.6% after a strong quarterly report for the chip maker, while Ford (NYSE:SA:) stock rose 2.2%.
At 8:17 am, 100 futures contracts are up 2.25%, while A and A are up 1.60% and 0.87%, respectively.
Apple and Amazon are wrapping up Big Tech’s earnings season after the bell, as Apple needs to reassure the market that its iPhone production in China won’t be affected much by the Covid-19 lockdown. For Amazon, the focus will be on whether its cloud business can defend its leadership over Microsoft (NASDAQ 🙂 (SA 🙂 and whether its retail business can handle rising delivery costs.
4. The Chamber agreed to aid Brazil in the amount of 400 Brazilian riyals
This Wednesday, 27, the Chamber of Deputies approved the Provisional Measure (MP) which provided for Auxílio Brasil permanently within the limit of R$400. The text, which was supported by 418 lawmakers, is now referred to the Senate for analysis. Both houses need to approve the text before May 16 so that the MP does not expire.
Auxílio Brasil costs an average of R$233 per family, but during 2022, in the hopes of re-electing President Jair Bolsonaro, the federal government is offering an extra so families will have at least R$400. Initially, the benefit will cost R$ 47 billion a year to the public treasury, but with a high payment range, the program receives an additional R$ 41 billion.
The opposition had mobilized to increase the amount of aid to R$600 and to make the program permanent, but only the second proposal was satisfied by Rapporteur João Roma (PL-BA). According to the decision, raising Auxílio Brasil to R$600 would force Bolsonaro to veto the amendment, since the electoral law prohibits the president from granting social benefits not provided for by law since the previous year.
5. European gas companies succumb to Russian pressure
The row between Europe and Russia over energy shipments intensified as the European Commission warned European Union companies not to comply with Russian demands to pay for gas in rubles.
Italian gas and gas giant Eni is said to be one of about 10 European gas buyers from Gazprom, who have signed on to open ruble accounts with Gazprombank to meet Russia’s demand for payment in Russian currency instead of euros or dollars. The European Union Commission warned that this would violate sanctions against Russia.
And European benchmark futures fell 4.6 percent to 102.5 euros per megawatt-hour. Analysts interpreted the row over gas shipments as a wake-up call for its biggest European clients, Italy and Germany, in what the Kremlin is increasingly calling an existential war against NATO rather than a limited operation of “liberation.” Russian speakers in eastern Ukraine.
“Music fanatic. Very humble explorer. Analyst. Travel fanatic. Extreme television teacher. Gamer.”