US GDP, Apple and Amazon earnings, yen drop
By Geoffrey Smith
Investing.com — U.S. GDP growth in the first quarter is expected to show a sharp slowdown due to Covid. Earnings season continues at a fever pitch, with last night’s update from Facebook owner (NASDAQ:) Meta Platforms ensuring a positive start to the day. Economic indicator caterpillar (NYSE:) also reported strong results, but the main event comes later in the day with Apple (NASDAQ:) and Amazon (NASDAQ:). The Bank of Japan pushed the yen to its lowest level in 20 years, once again refusing to act on rising inflation. The Swedish central bank, however, began a long cycle of rate hikes. The standoff between Europe and Russia over gas supplies has deepened, as Italy’s Eni bowed to Kremlin pressure to pay in roubles. Here’s what you need to know in financial markets on Thursday, April 28.
1. Omicron is expected to weigh on US GDP
The United States is expected to report a sharp slowdown in economic growth in the first quarter, the result of a resurgence of Covid-19 in its new strain Omicron which kept more of the economy in lockdown longer than expected at the start of the year.
The , expected at 8:30 a.m. ET (12:30 a.m. GMT), is 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 are likely to be revised upwards in further reading, as traditional methods of data collection have not fully adapted to changes in working practices during the pandemic.
At the same time, the Labor Department will release the numbers for the week. There have been few signs of easing labor market tensions in recent weeks, amid ample evidence that companies are struggling to hire new workers.
2. The BoJ drives the yen to its lowest level in 20 years
The Bank of Japan drove Japan to a 20-year low, stepping up its efforts to keep long-term government bond yields well below the rate of inflation.
The BoJ pledged after its routine policy meeting to defend its implied yield cap of 0.25%, signaling its determination to focus on supporting a fragile economy. The dollar jumped 1.3% to cross the 130 yen level for the first time since April 2002.
It also took the , which tracks the greenback against a basket of advanced economy currencies, to within half a percent of a 20-year high. The dollar also continued to appreciate against emerging currencies: it appreciated by 0.8% against the to reach an 18-month high.
It wasn’t all one way traffic though. The rise was widespread as the Riksbank raised its repo rate by 0.25% and announced a series of hikes to come over the next two years. The rest under pressure after data suggesting that .
3. Meta set up to increase stocks on opening. Apple and Amazon win the highlight of a busy day
Facebook owner Meta Platforms (NASDAQ:) gave U.S. stocks a boost with one that showed a , seen as a sign that its Instagram Reels feature is reasonably capable of competing with the likes of TikTok. However, the annual revenue growth of 6.6% remains the slowest in its history as a listed company. Meta stock was up 16.7% pre-market.
Shares of Qualcomm (NASDAQ:) also performed well pre-market, up 7.6% after a strong quarterly report for the chipmaker, while Ford Motor (NYSE:) rose 2.2% .
As of 6:15 a.m. ET, they were up 283 points, or 0.8%, while they were up 1.4% and up 2.0%.
Apple and Amazon end Big Tech’s earnings season after the bell, with Apple needing to reassure the market that its iPhone production in China won’t be too badly affected by the wave of Covid-19 lockdowns. For Amazon, the focus will be on the ability of its cloud business to defend its lead over Microsoft (NASDAQ:) and the ability of its retail business to cope with soaring delivery costs.
4. Bellwether Caterpillar Beats Expectations, Inflation Theme Runs Through Consumer Giants’ Updates
The earnings storm continues with unabated intensity, with a wide range of companies across the economy.
Caterpillar, widely seen as a gauge of the broader economy, posted quarterly earnings about 10% better than expected at $2.88 billion, while pharmaceutical giant Merck (NYSE:) raised its forecast for the whole year after a good start to 2022.
Consumer giants Altria (NYSE:) and McDonald’s (NYSE:) will give important insights before the bell, while overnight Unilever (NYSE:) and Danish brewer Carlsberg (OTC:) both warned that input cost inflation is expected to get worse before it gets better. Miner Glencore (OTC:) rose after cutting its production forecast for important battery metals and cobalt.
Samsung (KS:) meanwhile reported its best March quarter since 2018.
5. EU gas companies give in to Russian pressure
The confrontation between Europe and Russia over energy supplies has intensified as the European Commission warned European companies not to comply with Russian demands to pay for their gas in roubles.
Italian oil and gas giant Eni is said to be one of about 10 European buyers of Gazprom’s gas who have asked to open ruble accounts at Gazprombank to satisfy Russia’s demand to pay in Russian currency rather than euros or in dollars. The European Commission has warned that this would violate existing sanctions against Russia.
fell 4.6% to 102.5 euros per megawatt hour. Analysts interpreted the row over gas supplies as a wake-up call to its biggest European customers, Italy and Germany, in what the Kremlin is increasingly calling an existential war on NATO, rather than a limited operation to “liberate” Russian speakers in eastern Ukraine. .