Microsoft and Alphabet were at odds in the first quarter, with TikTok getting a bigger share of YouTube’s ad revenue. The stream of earnings reports will continue from Meta*, T-Mobile, Qualcomm, Ford and others a little later. Russia has cut off gas supplies to Poland and Bulgaria as the EU embargo on Russian oil approaches. U.S. home sales and mortgage data are due to be released. Here’s what you need to know about the financial market on Wednesday, April 27.

1. BIG TECH’S BIG DIVERGENCE COULD CREATE PROBLEMS FOR META

Tech giants Microsoft and Alphabet reported a sharp divergence in their first-quarter results; Microsoft beat expectations with a booming cloud hosting business and strong performance from LinkedIn, reflecting trends in the labor market.

Alphabet, on the other hand, fell short of expectations as its ad revenue suffered from both increased competition from companies like TikTok and consumers’ increased willingness to abandon YouTube now that they are no longer complying with the self-isolation regime.

Microsoft shares rose 5.3% in the premarket, while Alphabet shares fell 3.0% to an 11-month low.

Relatively weak results from Alphabet’s advertising business are likely to put pressure on Meta Platforms, owner of Facebook, ahead of its earnings report after the market close on Wednesday.

2. RUSSIA HALTS ENERGY SUPPLIES AS OIL EMBARGO APPROACHES

Russia cut off gas supplies to Poland and Bulgaria after the two countries refused to pay for gas in rubles.

This pushed European gas futures sharply higher for the second day in a row.

The move should be seen as a warning shot to Russia’s biggest customers, Germany and Italy, coming a day after Germany struck a deal with Poland that will significantly reduce its dependence on Russian oil and thus make it easier to resist the embargo. Under the deal, Germany will receive crude oil for its refineries from Poland’s import terminal in Gdansk.

Nevertheless, the escalating economic aspect of the Ukrainian conflict has weighed heavily on the euro, which fell to a 5-year low against the dollar, and on European equities.

3. THE U.S. MARKET WILL RISE SLIGHTLY AFTER THE PROFIT SURGE

U.S. stock indexes are expected to recover from the blow on Tuesday, although they seem a long way from recouping all their losses. Tesla, for example, has recovered less than 3% after falling 12.8% in the previous session.

By 06:15 a.m. ET (10:15 a.m. GMT), Dow Jones futures were up 400 points, or 1.2%, while S&P 500 futures were up 1.0% and Nasdaq 100 futures were up 1.1%.

Visa Steel Ltd and Mondelez International Inc recovered more in the premarket than they lost on Tuesday after posting better-than-expected first-quarter results, while shares of General Motors Company and Chipotle Mexican Grill Inc didn’t quite make it back to the upside despite also being in the plus side. Texas Instruments Incorporated) widened losses after warning of supply chain constraints Tuesday night. Mattel Inc rose after a WSJ report that said it is in talks to sell itself to private equity.

T-Mobile, General Dynamics Corporation, American Tower Corp, CME Group Inc , Kraft Heinz Co and Humana Inc) – among many other companies will report before the opening of trading, while Qualcomm, Amgen Inc, PayPal Holdings Inc and Ford Motor Company will report after the session ends.


4. DOLLAR HITS NEW HIGHS; DATA ON RETAIL AND WHOLESALE INVENTORIES AND HOME SALES ON THE SECONDARY MARKET WILL BE RELEASED

When the expected U.S. home sales data for March is released at 10:00 AM ET (14:00 GMT), there will be an update on how fast the housing market is weakening. Sales have fallen over the past 4 months amid rising prices (up to 20% year-over-year according to S&P Global (NYSE:SPGI) SPGI) and rising mortgage costs.

The Mortgage Bankers Association’s weekly data on mortgage applications and rates is due out at 07:00 AM ET (11:00 AM GMT). The 30-year mortgage rate hit a 13-year high of 5.20% last week and applications have declined over the past 6 weeks.

Retail and wholesale inventories data at 08:30 Eastern Time (12:30 GMT) may also be interesting in that it will shed light on how quickly final consumer demand is cooling off.

Expectations of monetary tightening and recession in Europe the day before drove the dollar index to a new 2-year high.

5. CRUDE OIL PRICES BACK ABOVE $100 ON THE PROSPECT OF AN EU EMBARGO, WHILE US INVENTORIES ROSE

Crude oil prices strengthened back above $100 per barrel as the prospect of an EU embargo on Russian oil became more real. Any such move would not only force European buyers to seek alternative sources of supply elsewhere, but would also hit Russia’s production capacity, given that its storage tanks and pipelines would likely fill to capacity almost immediately, further shrinking the global market.

Unconfirmed reports say such problems have already led to a marked decline in Russian oil production this month. Russia’s largest oil producer Rosneft (MCX:ROSN), meanwhile, failed to find a buyer for another export tender this week.

By 06:25am ET (11:25am GMT), U.S. WTI crude futures were up 0.5% to $102.19 per barrel, while Brent crude futures were up 0.5% to $105.16 per barrel.

This was despite an unexpectedly large increase in U.S. oil inventories last week, according to the American Petroleum Institute. U.S. government data is due to be released as usual at 10:30 a.m. ET (2:30 p.m. GMT).