By Geoffrey Smith
Investing.com -- The Federal Reserve concludes a two-day policy meeting, and U.S. GDP is expected to have contracted by the most in 11 years. President Donald Trump ordered meat plants to stay open to guarantee the nation's food supply. Unions argued that the move ignored workers' health. Earnings continue to flood in, with Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA) and Facebook (NASDAQ:FB) all due to report after the bell. And oil prices stabilize after weekly inventory data fail to shock. Here's what you need to know in financial markets on Wednesday, 29th April.
1. Trump orders meat plants to stay open
President Donald Trump signed an executive order forcing meat processing plants to continue operating, so as to guarantee food supply.
The order was criticized by the United Food and Commercial Workers International Union, which noted that 20 meatpacking and processing workers have died from coronavirus, and at least 6,500 have been affected. At least 22 plants processing various meats have been closed at some stage due to the disease.
The tension between health and economic policy continues to play out unevenly across the world. In the U.S., Tennessee and Wisconsin on Wednesday will become the latest states to allow certain smaller businesses to reopen.
Overnight, China eased border restrictions on its citizens, while Poland became the latest European state to relax its lockdown. On Tuesday, French President Emmanuel Macron had bowed to pressure from businesses to announce his country’s lockdown would be mostly lifted on May 11, despite stern warnings of renewed community spread.
2. Fed meeting ends, Powell press conference, GDP data eyed.
The Federal Reserve will conclude a two-day policy meeting at 2 PM ET. No changes to interest rates are expected, given previous statements largely rejecting the notion of negative rates. However, the further tweaks to the central bank’s liquidity operations and quantitative easing program are not ruled out, and the market will also respond to Chairman Jerome Powell’s comments at his press conference at 2:30 PM.
Powell will be able to comment on the first reading for first-quarter GDP, which is expected to have contracted by an annualized 4%, the steepest drop since 2009. The number is highly likely to be revised in subsequent readings and will in any case be dwarfed by the contraction expected for the second quarter.
3. Stocks set to open higher
U.S. stocks are set to open higher after losing momentum late on Tuesday’s session.
By 6:30 AM ET (1030 GMT), the Dow Jones 30 Futures contract was up 102 points or 0.4%, while the S&P 500 Futures contract was up 0.6% and the Nasdaq 100 futures contract was up 0.9%.
The Nasdaq (NASDAQ:NDAQ) contract in particular was supported by a well-received quarterly update from Alphabet (NASDAQ:GOOGL) after the closing bell on Tuesday, which showed its Internet advertising business holding up well.
European and Asian markets overnight had struggled with some mixed reports from the likes of Samsung (KS:005930) and Airbus but were still mostly higher. U.S. markets face early tests of strength from Boeing (NYSE:BA) and General Electric (NYSE:GE), both of which are due to report before the open.
4. Tech earnings to flood in
It’s another heavy day for tech earnings, with Microsoft, Facebook and Qualcomm all set to report after the bell.
However, the spotlight is likely to be hogged by Tesla, whose stock has whipsawed this week on the back of reports that it is trying to reopen its Fremont factory, even though lockdown restrictions are still being widely applied in California.
Tesla rivals Daimler (OTC:DDAIF), Volkswagen (DE:VOWG_p) and Nissan (OTC:NSANY) all issued updates of varying doom and gloom overnight, although the two German companies’ stocks both rose on indications that they both expect to stay profitable at an operating level this year.
5. Oil recovers; Inventory data due
Crude oil prices extended their recovery after the American Petroleum Institute reported that U.S. oil stocks rose fractionally less than expected last week.
The API’s estimate of a 10 million-barrel build in crude stocks was slightly less than the 10.6 million expected from today’s data from the government, which are due at 10:30 AM ET.
By 6:30 AM ET, the June contract for West Texas Intermediate was up 13% at $13.94 a barrel, while the international benchmark Brent was up 2.7% at $23.36 a barrel, as reports continued to dribble in of OPEC countries reining in output, in line with the recent deal to cut supply.