Overnight on Wall Street: Wednesday 28 April 2021

Equity Markets

Wall St had another mixed and muted session as investors weighed up a slew of corporate earnings against the upcoming Federal Reserve policy meeting and the renewed rise in Treasury yields.

• Dow Jones up 3 (0.01%)
• NASDAQ down 48 (0.34%)
• S&P 500 down 1 (0.02%)
• Russell 2000 up 3 (0.14%)

Microsoft (MSFT) reported revenue growth that blew past analysts’ expectations, jumping 19%, the largest quarterly increase since 2018.

Another big tech name reporting was Alphabet (GOOG) which reported huge beats on its Earnings and EPS for Q1. Added to that was a new $50 billion stock buyback plan, GOOG stock surged 4% in after hours trading on this.

Tonight we have another tech heavy reporting session with Apple (AAPL) and Facebook (FB) due to report their Q1 results.

Economic Announcements

This morning we had Governor Macklem of the Bank of Canada testifying before the Canadian parliament. The Governor reiterated the bank’s commitment to its 2% inflation target and painted an optimistic view of Canada’s economic resilience.

Nothing new was added from last week’s policy statement and as such had a negligible effect on the CAD.

Today we have the Australian Q1 CPI figure at 11:30 AEST where an inflation rate of 0.9% is expected. Any surprise in this figure could see some volatility in AUD.

Overnight the closely watched FOMC statement will be released at the conclusion of the US Feds two-day meeting. Analysts are not expecting any significant policy shift and are predicting a dovish tone from the Fed as they continue to weigh up the progress in economic recovery against further risks from the COVID pandemic.

FX Markets

With a rise in the benchmark 10 year bond yield, we saw renewed modest strength in the USD overnight.

The moves were somewhat muted though with tonight’s FOMC statement being closely watched as FX traders look for clues from the Fed as to the direction of future interest rates.

Most analysts are expecting a cautious, somewhat dovish tone from the Fed, if this proves to be true, we could see renewed selling pressure on USD overnight.

Oil

Oil prices rallied overnight, with USOUSD back above $63 as the OPEC+ Joint Ministerial Monitoring Committee came and went without surprises. Delegates at the meeting of oil producing nations signalled confidence in the current plans to ease the production cuts in May citing strong demand as the world economy recovers.

Despite worries about Indian demand as it struggles with a COVID crisis, ministers at the meeting believed the strong demand increase in the US and China especially would outweigh demand drops in India.