Here are the top five things you need to know in financial markets on Wednesday, July 27:
1. Fed decision: all eyes on the statement
As the Federal Reserve (Fed) is not expected to take action on interest rates at the conclusion of its two-day policy meeting at 18:00GMT, or 2:00PM ET, on Wednesday, as policymakers wait for the dust to settle from Britain's decision to leave the EU, all eyes will focus on the language in the policy statement as investors look for fresh hints on the timing of interest rate hikes over the next several months.
A recent string of better than expected data reignited speculation that the U.S. central bank will raise interest rates before the end of the year. Interest rate futures are currently pricing in a 25.8% chance of a rate hike by September. December odds were at 51.6%, compared with less than 20% a week ago and up from 9% at the start of this month.
2. Apple jumps on earnings, Boeing and Coca Cola on tap
Apple Inc (NASDAQ:AAPL) was soaring 6% in pre-market trade on Wednesday after reporting more iPhone sales than expected after the market close on Tuesday.
Boeing Company(NYSE:BA) (NYSE:BA) and Coca-Cola Company(NYSE:KO) (NYSE:KO) were the other Dow components scheduled to release earnings on Wednesday.
Outside the blue-chip index, Twitter Inc (NYSE:TWTR) was expected to put a damper on sentiment in tech as the company plummeted more than 10% in pre-market trade on stalling revenues and a disappointing outlook.
3. Durable goods and crude inventories on tap
Market participants looked ahead to the publication of durable goods, particularly the core number, for June at 12:30GMT, or 8:30AM ET, as the final piece of the U.S. economic puzzle for the second quarter that the Fed will have to digest before announcing its decision.
July pending home sales will be released at 14:00GMT, or 10:00AM ET.
Meanwhile, oil extended losses and traded near three-month lows on Wednesday while waiting for the U.S. Energy Information Administration to release its weekly report on oil supplies at 14:30GMT, or 10:30AM ET, amid expectations for a drop of 2.3 million barrels.
4. U.K.’s pre-Brexit growth beats forecasts
Gross domestic product (GDP) in the U.K. grew by 0.6% in the second quarter, beating expectations for an expansion of 0.4%.
The second quarter data is the final measure of growth in the run-up to the U.K.’s June 23 referendum that resulted in Britain’s decision to leave the European Union (EU), known as a Brexit, and economists surveyed by Bloomberg warned on Wednesday that they expect a contraction of 0.1% for the third quarter.
The data arrived prior to the U.S.’ own report for the April-June period that will be released on Friday.
5. Yen tumbles on stimulus reports and expectations for BoJ
The yen tumbled close to 1% against the dollar on Wednesday after another wave of reports suggested this time that Prime Minister Shinzo Abe and his government will compile a stimulus package of nearly 28 trillion yen, or $265.3 billion, to prop up Japan's flagging economy. That would be bigger than earlier reports of a possible headline figure of around 20 trillion yen.
Furthermore, as market players looked ahead to the Bank of Japan’s policy meeting later this week, the Nikkei reported that the Japanese central bank was mulling several options for easing monetary policy.