Geoffrey Smith 

Investing.com — The Federal Reserve held a press conference Wednesday that saw global markets fall after they initially rose in reaction to the Federal Reserve’s announcement. The fourth quarter GDP of the United States and weekly claims for unemployment are expected. This is because the Covid-19 virus has claimed the largest daily death in America. Tesla (NASDAQ) reports a record profit in 2021, but delays new product launches. Apple (NASDAQ) has released its earnings after the clock strikes midnight. Oil prices reached new seven-year highs after tensions over Ukraine continue to rise. What you need to know on financial markets this Thursday, January 27th.

1. Fed stimulus: Dollar surges in response to bond yields

The dollar and U.S. Treasury bond yields hit new highs for the year after Federal Reserve Chair Jerome Powell’s hinted at Wednesday’s press conference that the central bank will tighten monetary policy more quickly this year than previously assumed.

Short-term interest rate futures now imply a 20% risk that the first rate hike – expected in March – will be 50 basis points rather than 25.

After their shock, global markets stabilized overnight. The U.S. data will test that steadyness at 8:30 AM ET (1330 GMT) when the fourth quarter GDP numbers are due. Last week’s jobless claims numbers, meanwhile, will show whether the current wave of Omicron-wave Covid-19 is still weighing on the labor market. On Wednesday, data showed that the number of Americans who died from this disease reached a record 2,100.

2. Tesla reports record profits, but delays product launches

Tesla posted a record profit of $5.5 billion last year, after a fourth quarter that came in around 10% above analysts’ forecasts.

Automotive gross margin, which measures the company’s underlying profit from making cars rather than booking emissions credits, rose to 29.3% from 25.6%, while its net margin was over 10%.

However, the market had priced that much in and focused instead on the news that the company has again postponed the launch of new models, CEO Elon Musk saying that it wouldn’t be able to reliably source components for them this year.

3. Stocks open mixed. Intel (NASDAQ) guidance disappointed 

U.S. stocks are set to open mixed later as the market recovers from Powell’s seemingly hawkish comments.

At 6:xx AM ET they were flat at 8 points but up 0.1%, and NASDAQ 100 futures up 0.3%.

Intel is another stock that will be under scrutiny later. Their disappointing profit guidance for next quarter was overshadowed by a slight beat for 2021’s last quarter. Software company SAP suffered the same problems in German trading and fell 6.1% to a nine month low.

On the upside, chipmaker Xilinx (NASDAQ:) is set to open higher after smashing expectations with its fourth-quarter numbers and – more importantly – getting regulatory approval in China for its deal to sell itself to AMD.

4. Apple earnings expected to grow by over 12% 

It’s another heavy day for earnings ahead, with Apple set to report after the closing bell.
Analysts predict that earnings will rise 12% to $1.89 in the holiday quarter, up from a year earlier. This would mean the stock trades at 31x its 12-month trailing earnings. It is a stark reminder about how stretched valuations can be for cash-generative, mature technology companies.

Also reporting on Thursday are the two payments giants Visa (NYSE:) and Mastercard (NYSE:), Comcast (NASDAQ:), McDonald’s (NYSE:), Mondelez (NASDAQ:), Altria (NYSE:), Northrop-Grumman, Southwest Airlines (NYSE:) and Dow.

5. As tensions in Ukraine continue, oil falls from new 7-year highs

The stock market hit new seven-year highs before retracing slightly as fears over OPEC+ supply and further disruptions in the event of a Russian attack against Ukraine created a large geopolitical risks premium.

Russia’s Foreign Minister Sergey Lavrov was quoted by newswires as saying that Russia had received “no positive response” from the U.S. in its written proposals on how to de-escalate the situation in Ukraine. Russian newswires reported, however, that Russian troops were set to depart Belarus following completion of drills. This eases fears about Russian forces using Belarus as a base for an attack on Ukraine.

U.S. crude futures were 0.1% higher at $87.41/barrel at 6:20 ET. However, futures that hit $90 overnight were 0.1% lower at $88.82.