Fed Rate Hike, EU Sanctions, Lyft Crash – What’s Moving Markets This Wednesday By Investing.com

© Reuters

By Geoffrey Smith

Investing.com — The U.S. Federal Reserve is poised for its biggest interest rate hike in 20 years as India also hiked rates and the ECB edged closer to a hike rates in July. The EU confirms its intention to ban Russian oil from its market by the end of the year, pushing oil to its highs for the year. Lyft shares fall after the ride-hailing company warned of issues with driver releases and Uber brought forward its earnings release. Airbnb, AMD and Starbucks, however, saw positive overnight trading. Here’s what you need to know in the financial markets this Wednesday, May 4.

1. The Fed is preparing to increase its key rate by 50 basis points; India joins the party

The Federal Reserve is preparing to raise 50 basis points on , its biggest increase in 20 years, in a bid to reduce inflation, which has not been so high in 40 years. The decision is expected at 8:00 p.m. and President Jerome Powell’s press conference will follow half an hour later.

In recent weeks, Fed officials have consistently steered toward this measure, leaving little room for surprise. The key variable therefore remains the direction of the Fed’s balance sheet, where opinions differ on when it should start actively selling its bond portfolio and how quickly it should offload bonds into the market.

The “dot chart” of the Fed’s future rate forecasts may also reflect emerging fears that too much tightening could hurt an economy that is already showing signs of slowing in some sectors. {Weekly mortgage applications and the ISM survey of non-manufacturing industries could provide new elements before the Fed makes its decision.

Elsewhere, the global monetary tightening cycle continues, with the Reserve Bank of India following its Australian counterpart in earlier announcing a . Another senior European Central Bank official also opened the door to a eurozone first in July.

2. EU confirms intention to ban Russian oil imports

The European Union has confirmed its intention to phase out its purchases of Russian crude and refined products by the end of the year, thus increasing its economic pressure on the Kremlin.

The latest EU sanctions package also excludes Russia’s largest bank, Sberbank (MCX:), and two other major state-owned banks from the SWIFT messaging system, bringing them closer to the measures taken by the US and the United Kingdom, and prohibits consultants and public relations companies from serving Russian companies.

These measures will have to be approved by the 27 Member States. There was no immediate confirmation of reports suggesting exceptions to the oil provision for Hungary and Slovakia, which have the highest level of dependence on oil delivered through Soviet-era pipelines.

3. Stocks set for a positive open after upbeat reports on Starbucks and Airbnb

U.S. stock markets are set to open largely higher ahead of the Fed meeting, supported by strong earnings reports after the bell on Wednesday, including those from chipmaker (NASDAQ:), (NASDAQ:) and even (NASDAQ: :), whose ability to cope with rising costs and the closure of its Chinese stores had raised some concerns.

By 1:30 p.m., the were up 106 points, or 0.3%, while the and were broadly in line. All three currency indices posted modest gains on Tuesday.

Wednesday’s top releases include , (NASDAQ:), KFC and Pizza Hut owner (NYSE:) and (NYSE:) ahead of the opening, and (NASDAQ:), (NYSE:), (NASDAQ:) and ( NYSE:) after hours.

4. Lyft collapses in pre-market after driver cost warning

One of the most important reports will be from Uber (NYSE:), which was originally scheduled to be released after the close but was brought forward to 1:00 p.m., according to Bloomberg.

The move follows an alarming update from rival Lyft (NASDAQ:) after hours on Tuesday that sent the ride-hailing company’s stock tumbling 27%. Lyft said it would have to spend more to attract drivers, pushing back the timeline for generating sustainable cash.

Uber has suffered from similar concerns to a lesser degree, and its recent quarters have been buoyed by solid growth in its food delivery business. However, it remains in deficit. Uber stock fell 4% in premarket trading.

5. Oil up on EU action, EIA stocks expected

Crude oil prices rose again in response to the EU sanctions package, although the details came as no surprise after being flagged by officials earlier in the week.

However, they set the stage for a further escalation of the conflict, which could exacerbate the current disruptions in the global economy.

Russian President Vladimir Putin has signed a decree authorizing Russia to halt exports of a range of products, including metals and grains, to “hostile countries”. Reports also suggest that Putin is considering a formal declaration of war on the anniversary of the end of World War II next week, which would allow him to expand conscription and put the whole of economy on a war footing.

Around 1:30 p.m., the price of was up 3.7% at $106.25 a barrel, while the price was up 3.9% at $109.06 a barrel. The U.S. government is due at 4:30 p.m. as usual, a day after the reported a bigger-than-expected drop in crude inventories.

We want to say thanks to the writer of this post for this incredible material

Fed Rate Hike, EU Sanctions, Lyft Crash – What’s Moving Markets This Wednesday By Investing.com