By Geoffrey Smith
Investing.com - The U.S. sets out ambitious new climate pledges ahead of a summit to mark Earth Day. Jobless claims are expected to have ticked up slightly following last week's sharp fall. There is another big dump of earnings, with airlines prominent before the open, and Intel topping the bill after the close. The European Central bank holds its latest policy meeting, and oil slips to its lowest in a week as India’s COVID-19 crisis worsens. Here’s what you need to know in financial markets on Thursday, April 22nd.
1. Looking for a repeat on jobless claims
Can the improvement in the U.S. labor market be sustained? Initial jobless claims fell at their sharpest rates in several months last week to the lowest level since the pandemic started, suggesting that the torrent of layoffs caused by Covid-19 is finally, decisively, slowing down.
This week’s numbers are due at 8:30 AM ET (1330 GMT) as usual, and a slight rise from last week is expected, to 617,000 from 576,000. That would still represent an improvement from the dark days of winter, however.
The numbers are the most important economic release of a week that has been dominated largely by earnings. They’ll be followed at 10 AM ET by existing home sales data for March (which are also expected to have weakened slightly from February due to rising mortgage rates) and the Kansas City Federal Reserve’s monthly business survey at 11 AM ET.
2. U.S. makes new climate pledges ahead of summit
The U.S. administration is set to lay out plans to cut the country’s carbon dioxide emissions by 50% by the end of the decade, relative to 2005 levels, in an attempt to wrest back global leadership of the environmental agenda after Donald Trump’s carbon-friendly administration.
President Joe Biden will host 40 nations at a climate policy summit to mark ‘Earth Day’, with the Russian and Chinese presidents also in attendance.
The new targets imply an accelerated move away from internal combustion engines in transportation and decarbonisation of the power generation sector.
3. Stocks seen mixed in corporate earnings deluge
U.S. stocks are set to open mixed ahead of another busy day of earnings, in which Dow Chemical has already gotten the ball rolling with a handy beat on the bottom line.
By 6:30 AM ET, Dow Jones futures were up a negligible 9 points, less than 0.1%, while S&P 500 futures were down by less than 0.1% and Nasdaq 100 futures were down by a little more.
Appliance maker Whirlpool (NYSE:WHR) and pipeline operator Kinder Morgan (NYSE:KMI) will both be in the spotlight after posting much stronger-than-expected numbers after the close on Tuesday, while American Airlines (NASDAQ:AAL), Alaska Air (NYSE:ALK) and Southwest Airlines (NYSE:LUV) will both report early, along with miner Freeport-McMoran (NYSE:FCX) and health group Danaher (NYSE:DHR).
Intel (NASDAQ:INTC) – reporting for the first time under new CEO Pat Gelsinger – is the evening’s top release. Overnight, there were strong reports from consumer giant Nestle (SIX:NESN) and software group SAP (NYSE:SAP), but Credit Suisse (SIX:CSGN) fell after announcing a capital increase to plug the hole in its balance sheet left by the Archegos Capital fiasco.
4. ECB meets the day after Bank of Canada announced tapering
The European Central Bank holds its latest regular policy meeting, against a backdrop of low expectations for action, but constant interest in the guidance offered by President Christine Lagarde.
The bank had said at its last meeting that it would substantially accelerate the pace of its bond purchases in the current quarter to pre-empt any expectations of an early tightening of policy in response to a likely transitory spike in inflation. However, a number of the bank’s hawks have gone out of their way since then to stress the need to dial down purchases as soon as possible.
The meeting comes as the euro breaks through $1.20 for the first time in seven weeks, and a day after the Bank of Canada became the first G-10 central bank to announce a tapering of asset purchases in response to the improving economic outlook.
5. Oil slips to the week's lows
Crude oil prices have slipped to their lowest in a week, after India – one of the world’s biggest importers – reported the highest ever number of new cases of Covid-19 recorded by a country in a single day.
By 6:30 AM ET, U.S. crude futures were down 0.5% at $61.03 a barrel, while Brent crude futures were down 0.6% at $64.96 a barrel.
Two weak inventory reports from the U.S. this week, along with a constant drip-feed of new lockdown measures in India and Japan, have taken some of the edge off prices this week, as has the growing awareness of Iran’s return to the global market.
According to analysts at Tanker Trackers, Iranian exports of gas and condensate have increased by around 750,000 barrels a day since the start of the year, due less to the change in the U.S. administration’s approach to Iran than to the extreme discounts offered by the Islamic Republic to secure an important customer.