Markets are pricing in a 50 basis point Federal Reserve interest rate hike on Wednesday, which was telegraphed by several officials and Chairman Jerome Powell.
Powell also said “it is appropriate” in his view “to move a little faster” on interest rates than the Fed did in the 2004-2006 cycle, when the Fed raised 25 basis points at each meeting or even less frequently.
But fears of an overreaction from Fed policy are “fueling markets and will keep volatility high,” as UBS observed.
So markets around the world will be ‘laser-focused’ on what the Federal Open Market Committee (FOMC) is doing and saying, Deutsche Bank analysts said, with consumer price inflation at an all-time high. in four decades at 8.5% and an unemployment rate at 3.6%.
In addition to rate hikes, markets will expect Powell to indicate when the FOMC plans to begin ‘quantitative tightening’ (QT) – in other words, he’ll roll back a large chunk of his $9 trillion balance sheet. of US dollars built up through its support of the markets since the toll of the 2008 financial crisis by allowing the bonds they hold to mature without being rolled over – and the committee’s opinion on the “terminal” interest rate “.
Deutsche economists expect a 50 basis point hike in each of the next three meetings and an end rate of 3.6%, with QT starting in May and rising to around $1.6 billion from runoff until the end of 2023.
In UK company news, Flutter Entertainment PLC reports its first quarter results, with its shares down more than 30% so far this year.
Two months ago, full-year results were disappointing, with the owner of Paddy Power and Betfair saying the final quarter of 2021 was tough in the UK and Ireland with many sporting results in the punter’s favour.
The company also took a non-cash charge of £543m for the amortization of acquired intangibles, meaning it recorded a reported loss of £288m for the year.
Reported revenue was up 37% year-on-year, benefiting from the acquisition of Stars Group in May 2020, although underlying profit (EBITDA) was down 6%, reflecting the increase in investments in the United States and the regulatory impacts in its international activities.
For 2022 as a whole, consensus expects revenue to rise 10% to £6.6bn and EBITDA to jump by more than a third to just over £1bn sterling, with its US operations posting an EBITDA loss of £251 million, according to UBS.
The Boohoo Laundry List
Elsewhere, former ‘King of AIM’ Boohoo Group PLC will report final results with its shares, like industry rivals, after falling 30% to 81.8p this year, down 80% from its peak and, like online rival Asos, below their pre-pandemic levels.
Management assured in March that profit would be in line with guidance for the year to the end of February 2022, with adjusted profit expected to be £125m, up 61% on the previous two years and 14 % compared to the previous year.
The online fashion retailer said ongoing supply issues continued to impact the group’s international performance, with longer customer delivery times affecting performance.
“The group has experienced strong growth over the past two years, which has translated into significant market share gains,” said chief executive John Lyttle at the time.
As Barclays analysts also mentioned, online businesses such as Boohoo also typically face “a long list of headwinds”, which apart from supply chain issues also include growing competition and the environmental, social and governance compliance.
At Peel Hunt, they said: “We want to understand how boohoo intends to meet the current distribution challenges that have left US customers facing a standard delivery proposition of around 10 days and over 5 days in the UK. EU.
Important announcements for Wednesday, May 4
Finals: Dianomi PLC (AIM:DNM), e-Therapeutics PLC, Inspiration Healthcare Group PLC (AIM:IHC), Boohoo Group PLC (AIM:BOO)
Interims: Aston Martin Lagonda Global Holdings PLC (LSE:AML)
Commercial announcements: Direct Line Insurance Group PLC (LSE:DLG), Flutter Entertainment PLC (LSE:FLTR), OSB PLC
AGM: Barclays PLC (LSE:BARC), GlaxoSmithKline PLC (LSE:GSK), Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB), Mpac Group (LSE:MPAC) PLC, Ocado Group PLC (LSE:OCDO) , Standard Chartered PLC (LSE:STAN), Ten Entertainment Group PLC (LSE:TEG), Tribal Group, Tritax Big Box REIT PLC (LSE:BBOX), Unilever PLC (LSE:ULVR)
Economic data: US Federal Reserve (US), MBA Mortgage Application (US), ISM Prices Paid (US), ISM Services (US), Crude Oil Inventories (US), BRC Shop Price Index ( UK), Consumer Credit (UK), M4 Money Supply (UK), Mortgage Approvals (UK)