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Fed Minutes, Coinbase Results, Indian Woes - What's up in Markets

The minutes from the Federal Reserve's last meeting are due, while Robert Kaplan, Tom Barkin and Charles Evans all chip in with their two cents' worth on an improving economic outlook.

India's currency falls to a four-month low as the central bank is put off hiking rates by record high Covid-19 infections. Stocks are continuing their consolidation, while oil is also struggling ahead of U.S. inventory data later. And Coinbase sheds light on its operating figures ahead of its upcoming direct listing in New York. Here's what you need to know in financial markets on Wednesday, April 7th.

1. Fed minutes and speakers, trade data due

The Federal Reserve will release the minutes from its last policy meeting, adding further nuance to a message from Chairman Jerome Powell’s press conference that was overwhelmingly dovish.

They may make for an interesting contrast with an increasingly bright outlook for the U.S. economy: the IMF revised up its forecast for U.S. growth this year on Monday to 6%, from only 5.5% in January.

Also due later are speeches from Thomas Barkin and Charles Evans, the presidents of the Richmond and Chicago Federal Reserve banks, while trade data for March at 8:30 AM ET are likely to give a fresh indication of the strength of U.S. demand.

Dallas Fed President Robert Kaplan, meanwhile, said in an interview with The Wall Street Journal that he expects 6.5% growth and a jobless rate of only 4% by year-end but still warned it was too early to withdraw monetary stimulus.

2. Covid-19 surge pauses RBI, hits rupee

The rupee fell to a four-month low after the Reserve Bank of India shaved its cash reserve ratio at its latest policy meeting, a move that equates to a modest easing of monetary conditions.

The RBI left its key interest rates unchanged, despite another rise in inflation last month to over 5%.

The Indian economy is struggling with a fresh wave of Covid-19. The seven-day average for new infections hit a new record high on Monday, while the seven-day daily average death count has risen to its highest since December.

India has reacted to the surge by accelerating its own vaccination program, albeit at the cost of restricting exports to countries such as the U.K.

3. Stocks set to open mixed as consolidation continues

U.S. stocks are set to open mixed later, extending a consolidation that began on Tuesday and is hinting that the latest round of stimulus checks isn’t necessarily going straight into the stock market.

By 6:30 AM ET (1030 GMT), Dow Jones futures were up less than 0.1% - only 20 points, while S&P 500 futures were also up less than 0.1%. Nasdaq 100 futures were up 0.2%.

The earnings calendar is light, with only Simply Good Foods, Lamb Weston and RPM International (NYSE:RPM) due to report. Other stocks likely to be in focus include Amazon (NASDAQ:AMZN), whose CEO Jeff Bezos signaled his support for President Biden’s plans to raise corporate income tax on Tuesday, and Samsung (KS:005930), which unveiled a 44% rise in operating profit for the latest quarter during the Asian session.

4. Coinbase puts out first quarterly figures and guidance

Cryptocurrency trading hub Coinbase unveiled its expectations for its first quarterly results, ahead of its scheduled direct listing later this quarter.

The company said it generated more in revenue in the first quarter of 2021 than in the whole of 2020, at $1.8 billion, but gave an eyebrow-raising range of forecasts for its net profit, between $730 million and $800 million. Even the low end of that range implies a handsome operating margin, but the width of it is a reminder of the volatility of the company’s business.

The company expects trading volumes to slow over the rest of the year. It sees monthly transacting users, its key metric, at 5.5 million on average, down from 6.1 million in the first quarter. It has bear and bull scenarios that see MTUs anywhere between 4 million and 7 million.

5. Oil struggles below $60, EIA inventories eyed

Crude oil prices continue to struggle below $60 a barrel, in the wake of last week’s decision by OPEC and its allies to raise output by over 1 million barrels a day during the second quarter. The mood was damped by the progress of the Covid-19 pandemic in India, South America and Europe, which are all expected to stay under demand-sapping lockdowns for some time yet.

By 6:30 AM ET, U.S. crude futures were up 0.9% at $59.88 a barrel, while Brent crude was up 1.1% at $63.08 a barrel.

The U.S. government releases its inventory data for last week at 10:30 AM. A decline of 1.436 million barrels in crude stocks is expected.

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