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Top 5 Things to Know in the Market on Wednesday, April 22nd

Published 2020/04/22, 12:27
Updated 2020/04/22, 12:44
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By Geoffrey Smith 

Investing.com -- The Senate passed another $484 billion economic support bill. Crude oil prices stabilize at multi-year lows. Netflix gained twice as many subscribers as expected in the first quarter due to the coronavirus, while Delta Air Lines (NYSE:DAL) and Tesla are due to report more troubled first quarters. And Eurozone bond spreads widened back to their recent highs despite reports that the European Central Bank will ease monetary policy further at its council meeting on Thursday. Here's what you need to know in financial markets on Wednesday, April 22nd.

1. Senate approves $484 billion bill to support small businesses

The U.S. Senate passed a bill to top up the depleted program for aid to small businesses. Together with other measures designed to help hospitals, the deal includes $484 billion of fresh support measures. It is due for a vote in the House later this week.

According to various reports, House leaders agreed Tuesday to hold a vote later this week on allowing proxy voting, which would allow members to vote on the package without meeting in person.

House Democrats had expressed dissatisfaction with the bill for its failure to include increased resources for municipal governments. They had also wanted more money to be made available for virus testing.  

2. Oil prices steady at multi-year lows after mammoth U.S. stock build

Crude oil prices stabilized after another punishing session on Tuesday, in which the benchmark prices for both the U.S. and Europe fell sharply.

By 6:40 AM ET (1040 GMT), the June U.S. crude futures contract was trading at $11.54 a barrel, down 1.3%, while the June Brent contract was trading up 1.9% at $19.69 a barrel.

Both have stayed under pressure after the American Petroleum Institute’s weekly data showed a 13.2 million barrel increase in crude inventories, including a 5.4 million-barrel build at the national hub in Cushing, Oklahoma. If stocks at Cushing, the delivery point for the WTI contract, continue to rise at that level, then storage will be completely full long before the June contract expires.

The Energy Information Administration’s weekly oil report is due at 10:30 AM ET (1430 GMT).

Elsewhere, Interactive Brokers said late on Tuesday it had booked an $88 million loss after extreme volatility in the May contract wrong-footed many clients, leaving them without enough collateral to cover margin calls. The Chicago Mercantile Exchange said it would list options with negative strike prices from Wednesday.

3. Stocks set to open higher; Netflix (NASDAQ:NFLX)'s numbers meet market hopes

U.S. stocks are poised to open higher on Wednesday, supported by further signs of Europe reopening its economy from the Covid-19 lockdown, while stellar numbers after the bell on Tuesday from Netflix point to pockets of strength in consumer demand.

By 6:40 AM ET, the Dow Jones 30 Futures contract was up 224 points, or 1.1%, at 23,153. The S&P 500 futures contract was up 1.0% and the Nasdaq 100 futures contract was also up 1.0%.

Netflix, one of the chief beneficiaries of the stay-at-home trend of the last couple of months, said it gained a net 15.8 million new subscribers in the first quarter, double analysts’ estimates. Almost all the growth came from outside the U.S.

The company warned that the trend was unlikely to continue, as it merely moved up much of the growth that it had been expecting for the full year. The stock, which had risen 34% year-to-date in anticipation of the Covid bump, was down 1.0% in premarket trading.

4. Delta, AT&T, Tesla lead earnings deluge; TD Ameritrade eyed after Interactive Brokers oil hit

Netflix’s subscriber growth overshadowed the fact that it made less money than expected in the first quarter. It also overshadowed much better-than-expected numbers from Snap and Chipotle Mexican Grill (NYSE:CMG), which both rose strongly in after-hours trading and are set to open higher on Wednesday.

AT&T, Delta Air Lines, Tesla and Kimberly-Clark (NYSE:KMB) are among the highest-profile of a cast of thousands reporting before the bell.

Tesla is the highlight of after-hours reporters, although Interactive Brokers’ blowout will focus a few more eyeballs on TD Ameritrade’s update.

5. Euro Zone spreads widen as ECB set to discuss more easing

Risk premiums in the euro zone continue to widen as Italy’s Prime Minister Giuseppe Conte appeared to give up his fight for joint debt issues ahead of a Thursday EU summit.

Conte has proposed an extra 50 billion euros in economic support measures for the Italian economy, without any real progress in securing common funds from the rest of the euro zone.  Italy’s yield spread over 10-year German debt stabilized near its March high at 262 basis points in morning trading in Europe, while the spreads of Spanish, Greek and Portuguese debt all widened by seven basis points.

The European Central Bank will reportedly hold a call Wednesday ahead of Thursday’s council meeting to discuss the possibility of loosening the collateral rules for its lending operations.

 

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