Bank Earnings, Coinbase Goes Public, IEA Hikes Oil Forecast - What's up in Markets

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Bank Earnings, Coinbase Goes Public, IEA Hikes Oil Forecast - What's up in Markets
Credit: © Reuters.

By Geoffrey Smith

Investing.com -- Coinbase is set to go public via a direct listing at a reference price that values it north of $65 billion. Bitcoin and Dogecoin are basking in its reflected glory. JPMorgan (NYSE: JPM ) and Goldman Sachs (NYSE: GS ) are expected to report banner earnings as the season for first-quarter updates kicks off in earnest. French luxury groups have already shown the way. Stocks are consolidating while they wait for the numbers, but oil is at its highest in over a week after the IEA joined OPEC in raising its demand forecasts for this year. Here's what you need to know in financial markets on Wednesday, April 14th.

1. Coinbase goes public as Bitcoin, DogeCoin hit new heights

Coinbase, the world’s second-largest cryptocurrency exchange by volume, is set to go public via a direct listing later, a landmark development that arguably pushes cryptocurrencies further toward the financial mainstream.  

The reference price has been set at $250 a share, which on its fully diluted share count of over 263 million would value the company at $65 billion – in line with Intercontinental Exchange (NYSE: ICE ) and more than London Stock Exchange Group (LON: LSEG ). The simpler share count listed in its prospectus gives a valuation of just under $50 billion.

The company said earlier this month that it registered around $1.8 billion in revenue in the first quarter of this year, up over 800% from a year earlier, thanks to the explosive rise in prices for Bitcoin, Ether and other digital currencies.

Bitcoin itself traded above $64,000 for the first time overnight, while DogeCoin, the digital currency that started as a joke and has been touted aggressively by Elon Musk in recent months, rose 75% (sic) with no obvious price trigger.

2. Banks, luxury groups kick off earnings season

The first-quarter earnings season starts in earnest, with JPMorgan, Wells Fargo (NYSE: WFC ) and Goldman Sachs all set to report before the open.  All three are expected to report sharp increases in earnings, thanks to the low comparables from the previous year.

JPMorgan and Goldman are expected to have capitalized also on favorable capital market trends, not least through the massive increase in SPAC listings, which will in turn have helped their M&A advisory businesses.

Overnight, French luxury groups LVMH (PA: LVMH ) and Christian Dior also impressed, reporting sharp year-on-year sales increases, as their wealthy clienteles diverted spending from travel and leisure to purses and fashion. Both stocks hit record highs in European trading, as did Gucci owner Kering (PA: PRTP ).

3. Stocks drift ahead of earnings, Coinbase; Powell speaks at 12 PM ET

U.S. stock markets are drifting ahead of the release of key bank earnings later, with JPMorgan and Wells Fargo in particular eyed as proxies for the health of the broader U.S. economy.

By 6:30 AM ET (1030 GMT), Dow Jones futures were down 10 points, or less than 0.1%, while S&P 500 futures were up by a similar amount. Nasdaq futures were up 0.2%. All three were still enjoying the supportive tone from Tuesday’s rally in bonds after March inflation data failed to generate a negative shock.

In addition to the banks, Bed Bath & Beyond (NASDAQ: BBBY ), Hooker Furniture (NASDAQ: HOFT ) and Infosys (NYSE: INFY ) are also all set to report earnings before the open. Federal Reserve Chairman Jerome Powell’s address to the Economic Club of New York at 12 PM ET will also generate headlines, but is unlikely to add much to current knowledge about the central bank’s thinking.

 4. J&J vaccine hitch poses new threat to EU inoculation progress

The European Commission is to end its contracts with both Johnson & Johnson (NYSE: JNJ ) and AstraZeneca (NASDAQ: AZN ) when they expire, according to the Italian newspaper La Stampa.

J&J said it would pause the rollout of its vaccine in Europe on Tuesday after U.S. health authorities recommended a pause on administering it while possible links to rare but severe blood clots are investigated. Both vaccines are based on adenovirus-based technology.

J&J had contracted to supply enough vaccine to protect over 50 million people in the EU in the second quarter, over a quarter of the bloc’s total vaccination schedule for the next three months. As such, it threatens to delay further the attainment of herd immunity, something that could seriously undermined the bloc’s attempts to salvage the summer tourism season. EasyJet said earlier it expects to fly 20% of its total capacity in the three months through June, up from only 14% during the winter season.

5. IEA raises oil demand forecasts; EIA inventories due

The International Energy Agency followed OPEC in raising its forecasts for global oil demand this year, by an average of 230,000 barrels a day from its March forecasts.

However, it too pushed most of the increase back to the second half of the year, in view of the ongoing pandemic-related headwinds. The IEA said it expects a further 2 million barrels a day of capacity will be needed to come online in the second half above and beyond what the OPEC+ group has already agreed to release.

By 6:30 AM ET, U.S. crude futures were up 1.6% at $61.17 a barrel, their highest in 10 days, while Brent crude was up 1.6% at $64.70 a barrel.  U.S. government inventory data are due at 10:30 AM ET as usual, and are expected to show a 2.9 million barrel decline in crude stocks last week.

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