Geoffrey Smith 

Investing.com – The Federal Reserve has announced its largest interest rate increase in 20 years. India and the ECB also increased rates. EU confirms that it will ban Russian oil from its markets by the end the year. This pushes oil back to the highest level for the year. Lyft Shares in (NASDAQ:), tumble after Uber (NYSE:), warns that it has problems with drivers getting on the roads. Uber also moves to increase its earnings release.  However, the positive overnight session was dominated by Starbucks (NASDAQ) and AMD (NASDAQ). What you should know on Wednesday, May 4th in the financial markets 

1. Fed announces 50-bps rate hike. India is also joining the celebration 

Federal Reserve will raise U.S. interest rates by 50 basis points. This is the Federal Reserve’s largest increase in 20 years. It aims to lower inflation from its 40-year peak.

In recent weeks, Fed officials have been consistent in their guidance for this measure. There is little to no room for error. That leaves guidance on the Fed’s balance sheet as the key variable, where opinions differ as to when it should start active sales from its bond portfolio, and how fast it should unload bonds into the market.

The Fed’s ‘dot plot’ of future rate expectations may also reflect any nascent fears that tightening too far might hurt an economy that is already showing signs of slowing in some sectors. Before the Fed takes its final decision, the Fed might look at weekly mortgage applications or the ISM Nonmanufacturing Survey.

In other news, global monetary tightening continues with the Reserve Bank of India following the lead of its Australian counterpart by announcing an earlier surprise rate rise. In July, another top European Central Bank official opened up the possibility for a first Eurozone rate rise.

2. EU confirms plans to prohibit Russian oil imports

European Union announced its intent to stop purchasing Russian crude oil and refine products at the end the year. It is increasing economic pressure on Kremlin.

The EU’s latest sanctions package also delinks Russia’s largest bank, Sberbank, and two other large state-owned banks from the SWIFT messaging system, bringing it closer into line with U.S. and U.K. measures, and also bans consultants and PR firms from servicing Russian companies.

Each of the 27 member countries will have to approve these measures. No confirmation was available of any reports suggesting that oil provisions would be cut for Slovakia and Hungary, countries with the highest dependence on oil supplied through Soviet-era pipes.

3. Stocks set for positive opening after upbeat Starbucks, Airbnb reports

U.S. Stock markets are expected to open slightly higher in the wake of Wednesday’s bell. These strong earnings reports, which were provided by chipmaker Advanced Micro Devices, Airbnb, Starbucks and other companies, will support the Fed meeting.

By 6:15 AMDow Jones futuresThey were 0.3% higher at 106 points. On Tuesday, all three cash indices posted modest gains.

Wednesday’s reporting highlights include Marriott, Regeneron (NASDAQ:), KFC and Pizza Hut owner Yum! Brands (NYSE 🙂 and BorgWarner NYSE : before the open and Booking (NASDAQ :), MetLife NYSE :), and eBay (NASDAQ 🙂 Pioneer Natural Resources After hours

4. Lyft crashes at premarket after being warned about driver costs

Uber will be the one report to pay attention. Originally, Uber was scheduled to report at the close, but Bloomberg has now moved the release to 7 AM ET.

That follows an alarming update from its rival Lyft after hours on Tuesday which sent the ride-hailing company’s stock down 27%.  Lyft stated that it will have to invest more to recruit drivers and pushes back the timeframe for sustainable cash generation.

Uber suffered similar problems to a lesser extent, but its latest quarters were bolstered in part by strong growth at its food delivery company. But, the company is still in loss. Premarket trading saw Uber stock fall 4%

5. EIA inventory due to increase oil, EU action pushing prices higher

Crude oil prices rose again in response to the EU’s sanctions package, although the details came as no surprise after being flagged by officials earlier in the week.

These actions do however open up the possibility of escalating the conflict and potentially causing further disruptions to the global economy.

Russian President Vladimir Putin has signed a decree allowing Russia to halt exports of a range of products including metals and grains to ‘unfriendly countries’. Reports also suggest that Putin is considering a formal declaration of war around next week’s anniversary of the end of World War 2, allowing him to expand conscription and put the whole economy on a war footing.

At 6:30 AM ET (1130 GMT), oil prices had risen 3.7% to $106.25/barrel, and 3.9% to $109.06/barrel by the time of 10:30 GMT. The U.S. government’s weekly inventory data are due at 10:30 as usual, a day after the American Petroleum Institute reported a larger-than-expected drop in crude stocks.