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What’s happening: Shares of Baidu gained on Tuesday, after the company released results for its first quarter.
What happened: The search engine giant topped market expectations for the first quarter amid a rebound in its advertising and cloud businesses.
Baidu also said it was awaiting regulatory approval to launch one of its major products.
How were the results: The Chinese company swung to a profit of 5.83 billion yuan in the quarter to March 31, versus a year-ago loss of 885 million yuan.
Why it matters: Business momentum in China improved after the country’s government relaxed its strict covid-19 restrictions late last year, which triggered a rebound in consumer and business spendings.
The country’s GDP expanded at a higher-than-expected 4.5% year-over-year in the first quarter, recording the fastest pace in a year.
Baidu’s CEO Robin Li said the quick economic rebound after the Lunar New Year in late January provided boosted advertisers in the travel and healthcare sectors.
Revenues from Baidu Core surged 8% to 23 billion yuan. Sales from its largest segment, online marketing, grew 6% to 16.6 billion yuan. Revenues from the company’s streaming service iQIYI climbed 15% to 8.3 billion yuan, following a 28% increase in its subscriber base.
Baidu had partially unveiled its much-awaited rival to ChatGPT, the Ernie bot, in mid-March, but is yet to officially launch it. Li said the company had submitted an application to the government for the approval of Ernie and would roll it out after receiving clearance from regulators.
How shares responded: Baidu’s US-listed shares gained 4% to close at $132.68 on Tuesday, following the release of quarterly results. The stock has jumped around 33% over the past six months. Baidu’s shares also added around 3% on the Hong Kong Stock Exchange today.
What to watch: Investors will watch the developments around Ernie bot product, which could boost the company’s overall results as OpenAI’s ChatGPT is not available for mainland China users.
Context: The US dollar moved higher on Tuesday, following the release of retail sales data.
Details: Although data released on Tuesday showed retail sales coming in lower than expected for April, it marked an increase after two straight months of declines.
Retail sales grew 0.4% in April, versus a 0.7% decline in March, but missed market expectations of 0.8% growth.
Industrial production in the US rose 1% in April, surpassing market estimates of a flat reading. The NAHB/Wells Fargo Housing Market Index also climbed by 5 points to a reading of 50 in May.
Despite the positive data, market expect the US Federal Reserve to not announce another rate hike at its meeting next month.
Traders remained concerned about the debt ceiling issue. US President Joe Biden and House Speaker Kevin McCarthy are scheduled to meet later today to arrive at an agreement for increasing the debt ceiling.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, added more than 0.1% to reach 102.56 on Tuesday. The EUR/USD forex pair fell around 0.1% to 1.0866, while the GBP/USD pair declined more than 0.3% to 1.2486.
What are expectations: Traders await the release of economic data on building permits and housing starts from the US today. Building Permits in the US, which fell 7.7% in March, are expected to increase 0.2% in April. Analysts expect housing starts to decline by 1.5% in April, following a 0.8% decline in the previous month.
Other Markets: European indices closed lower on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.34%, 0.12%, 0.16% and 0.42%, respectively.
Ukraine said it had shot down Russia’s hypersonic missiles. The news sent the safe-haven US dollar index slightly lower this morning.
China’s average new home prices fell by 0.2% year-over-year in April. This being the 12th straight month of decline exerted pressure on the CNY/USD forex pair.
Australia’s wage price index rose by 3.7% year-over-year in the first quarter. The figure came in ahead of market expectations of 3.6% and sent the AUD/USD pair higher in forex trading this morning.
Japan’s economy expanded by 0.4% during the first quarter, following no growth in the prior quarter. Despite this, the JPY/USD forex pair remained under pressure.
The American Petroleum Institute said US crude stockpiles rose by 3.69 million barrels in the week ended May 12, versus market estimates of a decline of 1.300 million barrels. The news sent WTI crude oil prices lower this morning.
France’s unemployment rate, Italy’s balance of trade, Eurozone’s consumer price inflation rate and passenger car registrations, South Africa’s retail sales, US MBA mortgage applications, crude oil inventories, gasoline stocks change and distillate stocks, India’s money supply M3, Brazil’s retail sales, Canada’s new motor vehicle sales and foreign investment in securities, Russia’s gross domestic product, China’s foreign direct investment, Spain’s consumer confidence, as well as Argentina’s leading economic index.
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