Investing.com - Here are the top five things you need to know in financial markets on Wednesday, October 26:
1. Apple tumbles 3% after disappointing numbers
Shares of Apple were down around 3% in pre-market trade on Wednesday after reporting its third successive quarter of declining iPhone sales after the close a day earlier and forecast slimmer-than-expected profit margins over the upcoming holiday season.
After recording its first annual sales decline since 2001, Apple offered a conservative outlook on profit margins, 38% to 38.5%, compared to expectations of nearly 39%.
With the slump in Apple shares (NASDAQ:AAPL) expected to lead the Dow lower in Wednesday’s session, investors looked ahead to other blue-chip earnings from Boeing (NYSE:BA) and Coca-Cola Company (NYSE:KO) before the market open.
2. Oils hits 3-week low on U.S. inventory data
Oil prices slumped more than 1% to a three-week low on Wednesday after the American Petroleum Institute said late in the prior session that U.S. oil inventories increased by 4.8 million barrels in the week ended October 21, higher than the 2.0-million-barrel build forecast by analysts.
Market participants looked ahead to the official data from the U.S. Energy Information Administration out at 10:30AM ET (14:30GMT) Wednesday, amid analyst expectations for an increase of 1.69 million barrels.
U.S. crude oil futures fell 1.12% to $49.40 at 5:57AM ET (9:57GMT), while Brent oil traded down 1.02% to $50.27.
3. Fed quiet period begins in countdown to rate decision
The quiet period in which Federal Reserve (Fed) officials refrain from making public appearances or comments on monetary policy and the economy began on Wednesday ahead of the decision on interest rates set at the end of the two-day meeting on November 2.
While most analysts consider a change in policy next week to be “unlikely” due to its proximity to the U.S. presidential elections just six days later, markets were pricing in the chance of a rate hike at only 7.2%, according to Investing.com’s Fed Rate Monitor Tool. For December, odds stood at 73.6%.
With no further remarks forthcoming from Fed officials, markets will adjust expectations based on incoming economic data with particular attention paid to Friday’s release of third quarter gross domestic product.
Wednesday’s economic calendar will include the goods trade balance and wholesale inventories for September, a preliminary reading on October’s service sector activity from Markit and September new home sales.
4. $103 billion Brexit black hole looms for U.K.
Concern over the consequences of Britain’s decision to leave the European Union (EU) dampened investor sentiment in the U.K. on Wednesday, sending London’s FTSE 100 below the psychological level of 7,000 points.
The Resolution Foundation calculated that the British government was on track to borrow more each year while taking in less and less tax receipts over the next five years, leaving the U.K. with an £84 billion ($103 billion) gap in public finances.
5. BoJ may move away from bond purchase target
The Bank of Japan (BoJ) is considering to move away from references to the 80 trillion yen ($7.7 billion) purchase level in monetary policy statements, according to people familiar with the discussions cited by Bloomberg.
The objective was said to be a move away from a specific number in order to concentrate on the new objective of keeping Japanese bond yields near zero, rather than focusing on the amount of purchases.
The BoJ is scheduled to announce their policy decision next week with consensus expecting no new easing measures.