Fed minutes, Stellantis payout, Nvidia earnings - what's moving markets

© Reuters.

By Geoffrey Smith

Investing.com -- The Federal Reserve will release the minutes of its last policy meeting, as markets fret increasingly about interest rates staying higher for longer to tackle sticky inflation. Stocks are due for a third straight session of losses as bond yields hit three-month highs. A senior ECB official says markets have 'overreacted' to comments that sent bond yields higher in the Eurozone last week. Jeep maker Stellantis and Chinese search giant Baidu both announce big shareholder payouts, but Rio Tinto becomes the latest miner to take a more cautious view. Nvidia and TJX lead the roster of quarterly earnings. And the American Petroleum Institute releases its weekly estimate of crude and distillate stocks. Here's what you need to know in financial markets on Wednesday, 22nd February.

1. Fed minutes

The Federal Reserve releases the minutes of its last policy meeting at 14:00 ET (19:00 GMT), into a market increasingly unsettled by fears that inflation is proving to be 'stickier' than expected, forcing the Fed to keep rates higher for longer.

The 2-year U.S. Treasury note yield, a rough proxy for expectations for Fed interest rates, hit a three-month high of 4.75% on Tuesday as U.S. investors returned from a long weekend.

New York Fed Governor John Williams is also due to speak later, but his comments will come well after the market close at 18:30 ET.

2. Markets have overreacted, says ECB's Villeroy

The European Central Bank mustn’t pre-commit to a series of aggressive interest rate hikes in response to its own inflation problems, a key member of its governing council said in an interview.

Bank of France Governor François Villeroy de Galhau told the French newspaper Les Echos that markets have “overreacted” to comments made last week by influential board member Isabel Schnabel, who had warned that the ECB is still far from being able to claim victory over inflation.

Her comments gained some validation earlier as Germany’s core inflation rate was confirmed to have risen sharply in January. Separately, the Ifo business survey showed confidence at a six-month high.

In Italy, meanwhile, new figures showed inflation fell by more than expected in January but was still running at 10%.

3. Stocks set to extend losses again; TJX, Nvidia earnings in focus

U.S. stock markets are set to open lower again after falling heavily on Tuesday due to fears over the course of Fed policy.

By 06:40 ET, Dow Jones futures were down 48 points, or 0.2%, while S&P 500 futures and Nasdaq 100 futures were down in parallel.

On a busy day for earnings, mining stocks were in focus after Australian-based giants BHP (ASX:BHP) and Rio Tinto (ASX:RIO) both cut their dividends within 24 hours of each other. Rio’s fourth quarter earnings also fell nearly 10% short of forecasts. Separately, Baidu ADRs (NASDAQ:BIDU) were up over 7% in premarket after the Chinese search giant announced a $5 billion buyback and forecast a much better 2023. French dairy giant Danone SA (EPA:DANO) also hit a six-month high after beating forecasts with its results.

Most of the day’s earnings action is due late on, with Nvidia (NASDAQ:NVDA), Pioneer Natural Resources (NYSE:PXD), eBay (NASDAQ:EBAY), Lucid Group (NASDAQ:LCID) and Etsy (NASDAQ:ETSY) all reporting after the close. TJX (NYSE:TJX) will command attention early on, especially after weak outlooks from retail giants Walmart (NYSE:WMT) and Home Depot (NYSE:HD) on Tuesday.

4. Stellantis splashes the cash; Tesla pares back German plans

Carlos Tavares continued to work his magic at Jeep maker Stellantis (NYSE:STLA). The group, which also owns the Peugeot (OTC:PUGOY), Opel, and Fiat brands, said it will buy back $1.6B of stock and pay out $4.5B in dividends after its revenue and net profit rebounded sharply in 2022, despite ongoing problems with semiconductor availability.

The group’s sales of electric vehicles rose 41% on the year to 288,000.

Elsewhere, Tesla (NASDAQ:TSLA) confirmed to Reuters that it is scaling down its ambitions to build batteries at its plant in Germany, diverting investment resources instead to the U.S. to exploit the tax breaks offered by the Inflation Reduction Act.

The move will add to concerns in the EU and U.K. that the IRA is hollowing out investment in green technology in Europe.

5. Oil falls on rate fears; API inventories due

Crude oil prices fell under the influence of the interest rate fears that also hurt other risk assets on Tuesday.

By 06:45 ET, U.S. crude futures were down 1.1% at $75.56 a barrel, while Brent crude was down 1.0% at $82.25.

The American Petroleum Institute releases its weekly inventory data at 16:30 ET.

Elsewhere, Kazakhstan said it intends to ship an average of 25,000 barrels a day of crude to Germany through Russia’s pipeline system this year, raising the likelihood of Russian oil seeping into the European market despite last year’s sanctions.