These are the top 5 things you need to know in financial markets on Thursday, May 2.
1. Bank of England meets as Brexit tensions rise again
The British pound is on the rise again amid reports that the two main parties are closer to agreeing a form of Brexit that would remove any need for a second referendum on the issue.
In addition, the Bank of England’s Monetary Policy Committee is expected by analysts to talk more openly about future interest rate hikes after its policy meeting today, although it is expected to keep its key rate unchanged. Data released earlier showed the construction sector returned to growth again in April. The BoE’s statement is due at 7 AM ET.
Prime Minister Theresa May’s rapprochement with the Labour Party has depended in large measure on accepting its demands for a customs union with the EU – something despised by the Conservatives’ hard Brexiteer lawmakers and the party membership. It’s not clear whether the Conservatives will let May stay in power long enough to push that idea through, and local elections across the U.K. today are expected to result in heavy losses for the party, creating the pretext for another attempt to unseat her.
2. Dollar breaks losing streak as Fed pats away growth fears
The dollar firmed and bonds and stocks sold off overnight after the Federal Reserve signalled there would be no knee-jerk interest rate cut, despite signs of weakening inflationary pressure and a brow-beating from President Donald Trump.
The Fed’s belief that there’s no need to act will be tested by a series of data releases over the next 48 hours, with jobless claims and labor cost data due at 08:30 AM ET (1230 GMT), factory orders at 10 AM, and vehicle sales at 3.30 PM. They’ll be followed on Friday by the monthly employment report for April.
3. Wall Street set for rebound
Wall Street is set to rebound from its post-Fed losses when it opens, supported in part by a CNBC report suggesting that the U.S. and China are aiming to wrap up their trade talks by May 10.
At 05:30 AM ET, the S&P 500 futures contract was up 8 points or 0.3%, the Dow futures contract was up 54 points, or 0.2%, while the tech-heavy Nasdaq 100 futures contract was up 29 points, or 0.4%
Chipmaker Qualcomm (NASDAQ:QCOM) is likely to see active trade after reporting last night, when it predicted a weak quarter due to the Chinese economic slowdown and the slow take-up of 5G technology. Other names of note to report Thursday include biotech company Gilead (NASDAQ:GILD), games maker Activision Blizzard (NASDAQ:ATVI) and chemicals giant Dow, as well as Expedia (NASDAQ:EXPE) and Under Armour (NYSE:UAA).
4. Oil prices slip on record U.S. output, stock build
Crude oil prices fell below $63 a barrel after a stronger-than-expected rise in U.S. inventories last week that left them at their highest in 19 months, coupled with the Fed’s reluctance to engage in pump-priming the global economy.
Government data released Wednesday also showed U.S. output at a new record high of 12.3 million barrels a day. The increase in U.S. supply has largely outweighed production cuts by Saudi Arabia and others so far this year, although markets continue to price in a geopolitical risk premium as President Donald Trump tries to close the loopholes that allowed Iran to keep exporting some of its oil until now.
5. Beyond bullish
Investors continue to lap up high-profile IPOs from start-ups with little or no profitability. Vegan burger maker Beyond Meat (NASDAQ:BYND) has priced its initial public offering at $25 a share, at the top of a range that was already raised due to high investor demand.
The company also increased the number of shares it intended to sell by 10%. The deal values Beyond Meat at around $1.5 billion.