The US market is waking up “from the hangover” after the Fed’s move, but solid gains in various sectors of the economy after the close of trading on Wednesday helped them hold on to most of the gains. Bond yields rose the day before while the market “digested” Jerome Powell’s forecast of a series of half-point rate hikes. The Bank of England is also due to raise rates, albeit less tightly due to the slowing UK economy. Jobless claims data is expected, as are earnings reports from ConocoPhillips, Shopify and Datadog. And oil prices are on the upswing as OPEC and its allies prepare to announce another production increase that will be hard to meet in real life. Here’s what you need to know about the financial market on Thursday, May 5.

1. BOND YIELDS RISE AS SOBERING AFTER FRS MOVE

Global stock indexes followed the U.S. market’s gains the day before, but bonds are experiencing a hangover of sorts after the wild rally that followed the Federal Reserve chief’s press conference on Wednesday.

U.S. stock indexes had their best day in years on Wednesday after Fed chief Jerome Powell said a 75 basis point increase in the futures rate was “not actively under discussion.” Powell said the Fed is confident of accomplishing a “soft landing” for the economy with a series of half-point rate hikes this summer.

U.S. Treasury yields rose again the previous day, with the yield on the 10-year paper rising 4 basis points to 2.96% and the yield on the Fed’s more rate-sensitive 2-year bond rising 7 basis points to 2.69% after the market revised its view that the rate hike trajectory outlined by Powell was still a significant tightening of financial conditions.

There will be a slight lull in US economic data today as only the weekly jobless claims and Challenger job cuts survey are due to be released before the official labor market report on Friday.

2. BANK OF ENGLAND PREPARES FOR RATE HIKE AMID WEAKNESS

Interest rates continue to rise around the world. Brazil’s central bank raised its key rate by another percentage point at Wednesday’s meeting following the Fed’s decision, the second consecutive 1-point increase. It joined Australia and India among other G-20 countries that raised rates this week.

The baton now passes to the Bank of England, which raised its key rate by 0.25 percentage point to 1%. That’s the highest level in 13 years. The regulator is raising the rate to fight inflation. The Bank of England is likely to refrain from taking tougher action due to the sharp decline in the dynamics of the UK economy in recent months due to higher inflation and tax hikes. GBP/USD fell to $1.1255 ahead of the news.

Local elections in the UK are also set to hit the headlines as the country is set to make its judgment on the government’s handling of the cost of living crisis and Prime Minister Boris Johnson’s repeated breaches of his own quarantine rules.

In the eurozone, ECB board member Fabio Panetta, the bank’s most outspoken dove, has admitted that negative rates and quantitative easing are no longer “necessary.”

3. THE US MARKET IS SET FOR SOME CORRECTION AT THE OPENING; SHOPIFY AND CONOCO REPORTS ARE EXPECTED.

U.S. stock indexes are poised to give up at least some of their gains due to a correction in Wednesday’s rally when they open a little later today.

By 06:15am ET (11:15am GMT), the Dow Jones futures were down 126 points, or 0.4%, while the S&P 500 futures were down 0.5% and the Nasdaq 100 futures were down 0.7%.

Some support for the market came from another batch of big earnings reports after Wednesday’s close, with online travel agency Booking ) in particular standing out. Pioneer Natural Resources also handily beat earnings estimates, as did MetLife and lithium mining company Albemarle. Still, Etsy shares are expected to go down after the company failed to allay concerns about sellers leaving the platform due to high sales commissions.

Major corporate updates on Thursday begin with ConocoPhillips, Shopify , Datadog, Kellogg and Becton Dickinson, while EOG Resources, Vertex), McKesson, Illumina and Monster Beverage will report after the close of trading.


4. SEC HAS JOINED THE LIST OF “NAUGHTY” CHINESE COMPANIES; CAIXIN’S SERVICES PMI COLLAPSED

3 stocks likely to be in the spotlight a little later are Chinese companies: JD , Bilibili and Pinduoduo after the US Securities and Exchange Commission (SEC) added to its list of companies at risk of delisting for failing to file reports that comply with US law. Shares of JD.com were down 1.2% and Pinduoduo was down 3.4%.

Economic news from China is not yet improving. Caixin’s services PMI, which more accurately reflects non-manufacturing activity than the official version, fell to 36.2 from 42.0 a month earlier and is now well below its level in months other than February 2020.

COVID-19 outbreaks in China also show no sign of improvement as Beijing has strengthened current restrictions and the reopening of Shanghai is still dragging on.

5. CRUDE OIL PRICES HIT 2-WEEK HIGH AMID PREPARATIONS FOR THE OPEX MEETING

Crude oil prices hit a 2-week high as the market digested the implications of EU plans to phase out Russian oil by the end of the year. The plans, which have yet to overcome resistance from Hungary before coming into effect, are backed by new measures banning a range of ancillary services such as insurance for ships carrying Russian oil.

All attention will now turn to the afternoon meeting between OPEC and its allies, which is likely to have a somewhat surreal tone, promising another production increase from June despite evidence of a sharp drop in Russian output.

By 06:20 a.m. ET (10:20 GMT), U.S. WTI crude futures were up 0.6 percent to $108.41 a barrel, with the latest rise halted at $108.97. Brent crude futures rose 0.9% to $111.08 a barrel.