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Fed Meeting Starts, RBA Rise, JOLTS, AMD Earnings


© Reuters

By Geoffrey Smith

Investing.com — The Federal Reserve begins a two-day meeting that is expected to end with a half-point hike in U.S. interest rates. Australia’s central bank took the lead overnight, rising 25 basis points. The Labor Department releases the monthly jobs survey, while results from companies such as Pfizer, DuPont and, after the bell, AMD and Airbnb are announced. Beijing is tightening its grip and oil prices are giving up some of their Monday gains, as oil companies take turns posting the best results in years, at least in underlying terms. Here’s what you need to know in the financial markets this Tuesday, May 3.

1. RBA takes a leap as Fed begins two-day caucus

The and US bond yields eased slightly as the market settled in to await the outcome of the Federal Reserve’s two-day meeting, which begins later on Tuesday.

Expectations of a half-point increase in the fed funds target range to 0.75-1.00% are nearly universal, meaning that the key variable coming out of the meeting will be the outcome of two years of bond purchases. Several Fed officials have called for an early start to active selling of the Fed’s bond portfolio to maintain a positive slope in the yield curve.

It’s been a busy week for central banks in the Anglosphere, with the Bank of England expected to give its own signal on quantitative tightening on Thursday. The Reserve Bank of Australia, meanwhile, unexpectedly raised its key rate by 25 basis points overnight, pushing the Australian dollar up 0.7%. The is still down about 6% over the past month.

2. JOLTS survey, industrial orders

The Labor Department will release the first of three key labor market indicators due this week at 10 a.m., along with the monthly survey. Recent surveys have shown that job vacancies are trending towards record highs, while companies often complain of skills shortages. High job turnover is also associated with higher incomes, as many people take advantage of such changes to shift their income.

The and for the month of March are also expected at 4:00 p.m.

Data released this morning in the euro zone shows that inflation hit a record high of nearly 37% year-on-year in March, while the improvement in the German labor market slowed in April.

3. Equities remain stable before the avalanche of results; AMD, Starbucks and Airbnb will publish their results at the end of the day

Another round of results will be released in a still jittery market that only recovered half of its Friday losses on Monday. Stocks are expected to open flat or lower later, despite some impressive performances from Monday’s late reporters.

(NASDAQ:), (NASDAQ:), and (NYSE:) both comfortably beat earnings forecasts, as did the pipeline company (NYSE:). Both of these companies have clearly ruled out any major production increases in the near term, preferring to use their improved cash flow to bolster their balance sheets.

At 1:50 p.m., were down 26 points, or less than 0.1%, while were down 0.1%, and down 0.2%.

Among the first speakers on this Tuesday are the pharmaceutical giants Pfizer (NYSE: and Biogen (NASDAQ:), industry leaders Rockwell (NYSE:) and DuPont (NYSE:), as well as financial giant S&P Global (NYSE:) (for the first time after the consolidation of IHS Markit) AMD (NASDAQ:), Starbucks (NASDAQ:) and Airbnb (NASDAQ:) top the list of laggards, along with AIG (NYSE:) and Caesars (NASDAQ:).

4. Beijing’s lockdown is tightening; fear of my strike Ali Baba

Containment in the Chinese capital is gradually tightening. Beijing has asked residents not to leave the city unless necessary and has delayed the reopening of schools which was scheduled for Thursday after the three-day holiday.

The South China Morning Post reported on incidents in which authorities in neighboring Hebei province locked doors to prevent people from leaving their homes, providing further evidence of human tensions caused by official policy. of “zero covid” (reaffirmed last week by President Xi Jinping in person).

In other Chinese news overnight, shares of Alibaba (NYSE:) in Hong Kong fell 9% following reports that police in Hangzhou, home of the e-commerce giant, had arrested a internet executive named Ma. The stock rebounded when it turned out it was not Alibaba founder Jack Ma, but the incident illustrates the fragility of market sentiment.

5. Oil Gives Up Gains Ahead of API Meeting; BP (LON:) posts a big loss due to its withdrawal from Russia, but increases its share buybacks

Crude oil strengthened after rising on Monday ahead of another meeting of largely empty promises from OPEC and its allies to increase production.

BP (NYSE:) CEO Bernard Looney said he expects the shortage of Russian crude to double to 2 million barrels per day due to the cumulative impact of Western sanctions, which are expected to be reinforced later this week. Those hoping for a surge in U.S. shale production to compensate were disappointed late Monday by shale oil producers Diamondback (NASDAQ:) and Devon Energy (NYSE:), which reiterated their commitment to clean up their balance sheet.

BP, meanwhile, posted a $25 billion loss on writedowns at its Russia business, but increased its share buybacks due to strong improvements in underlying cash flow.

By 1:55 p.m., U.S. futures were down 1.1% at $104.06 a barrel, while the was down 1.1% at $106.41 a barrel. The American Petroleum Institute are expected at 10:30 p.m.

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