The news shaping the markets today

Ukraine’s President Volodymyr Zelensky said Russia had carried out genocide in the eastern Donbas region. Ongoing tensions between these nations sent WTI crude futures slightly higher this morning.

China’s industrial profits climbed by 3.5% from a year ago to 26.58 trillion yuan in the January-April period, following 8.5% growth in the previous period, amid rising raw material prices and supply chain issues. The news exerted pressure on the CNY/USD forex pair.

Australia’s retail sales grew 0.9% to another record high of A$33.9 billion in April, following 1.6% growth in March. The country’s retail sales growing for the fourth straight month sent the AUD/USD pair higher in forex trading this morning.

US natural gas stockpiles grew by 80 bcf (billion cubic feet) during the latest week, below market expectations of an 89 bcf rise, which sent natural gas futures lower this morning.

Canada’s retail sales rose by 0.8% in April, lending support to the CAD/USD forex pair.

What’s happening: Shares of Alibaba Group Holding jumped on Thursday, after the company reported better-than-expected results for its fourth quarter.

What happened: Although the e-commerce giant delivered a strong quarter, it did not issue an outlook for the current fiscal year citing uncertainties related to the covid-19 resurgence.

While Alibaba’s revenue growth was higher than its peers, including Tencent and Baidu, the company’s performance lagged that of a major ecommerce group in China.

How were the results: Alibaba reported growth in revenues for the latest quarter but the pace was the slowest since its listing as a publicly traded company.

• Revenues grew 9% to 204.05 billion yuan and exceeded market expectations of 199.25 billion yuan.
• Adjusted earnings came in at 7.95 yuan per share, beating the consensus estimate of 7.31 yuan per share.

Why it matters: The resurgence of covid-19 infections in China resulted in restrictions in Shanghai and other regions and impacted Alibaba’s overall business, with consumers limiting their shopping to essentials. Although delivery services resumed in May, factors like shipping backlogs weighed on the overall recovery.

Some analysts also lowered their projections for China’s economic growth this year due to the covid-19 lockdowns, which resulted in several companies issuing warnings of a slowdown in sales.

Revenues at the company’s cloud computing unit climbed 12% to 18.97 billion yuan in the quarter, while sales at its core commerce unit grew 8% to 140.33 billion yuan. Annual active consumers reached around 1.31 billion in the twelve months ending March 31, a rise of 28.3 million from the twelve months ending December 31.

“Alibaba delivered on the goal of serving one billion annual active consumers in China this past quarter and achieved a record RMB 8,317 billion in global GMV for the fiscal year,” CEO Daniel Zhang said during the earnings call. However, Zhang mentioned there were “macro challenges that impacted supply chains and consumer sentiment.”

Alibaba’s revenue growth of 9% was better than that reported by Tencent and Baidu, whose sales grew less than 1% in the latest quarter. However, it lagged the revenue growth of 18% reported by JD.com.

Alibaba’s fintech affiliate, Ant Group, reported a profit of around 22 billion yuan for the quarter, up from 21.76 billion yuan in the year-earlier period. Alibaba received a dividend of 3.9 billion yuan from Ant Group.

Alibaba didn’t issue any outlook for the year, citing the unpredictable impact of China’s zero covid-19 policy.

How shares responded: Alibaba’s US-listed shares jumped 14.8% to close at $94.48 on Thursday. The stock has lost around 22% year to date.

What to watch: Investors will keep an eye on covid-19 restrictions in China as well as supply chain bottlenecks.

The markets today

The US dollar will be in focus today ahead of a basket of major economic reports from the country

Context: The greenback traded lower on Thursday, following the release of minutes from the Federal Reserve’s latest meeting.

Details: The Fed released minutes from its May meeting on Wednesday, with most participants favouring a further rate hike of 50 basis points at the forthcoming June and July meetings.

The US dollar index, which measures the greenback’s performance versus a basket of six major peers, breached the 102 resistance level and spiked to 102.45 immediately after the release of the Fed’s minutes.

The index settled lower by around 0.2% at 101.83 on Thursday, with the country’s central bank expected to remain on the course with rate hikes.

Sentiment for the greenback was impacted by economic data, which showed a contraction in the US economy of 1.5% in the first quarter, versus the initial reading of a 1.4% decline. The number of persons filing new claims for jobless benefits declined by 8,000 to 210,000 in the latest week.

The EUR/USD pair traded higher by over 0.4% to 1.0730 on Thursday, while the USD/JPY forex pair fell around 0.2% to 127.09. The GBP/USD pair climbed by around 0.3% to 1.2607.

What to watch: Traders await the release of economic data on personal spending, personal income and personal consumption expenditure from the US today. Personal spending, which rose 1.1% in March, is expected to rise another 0.7% in April. Analysts expect personal spending to grow 0.5% in April. The personal consumption expenditure price index is expected to surge 6.4% year-over-year in April, following 6.6% growth in March.

Other Markets: European trading indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 0.56%, 1.59%, 1.78% and 0.78%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Spain’s retail sales, Eurozone’s loans to households, loans to private sector and money supply M3, India’s foreign exchange reserves, US goods trade balance, wholesale inventories, University of Michigan consumer sentiment index and Baker Hughes crude oil rigs, Argentina’s consumer confidence indicator, Canada’s government budget value, as well as Brazil’s value of loans and net payrolls.

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