The news shaping the markets today

US President Joe Biden termed Russia’s decision to suspend its participation in the New START nuclear arms control treaty a “big mistake.” The safe-haven US dollar index fell this morning.

Argentina posted a trade deficit of $484 million in January, versus a $371 million surplus in the year-ago period, exerting slight pressure on the ARS/USD forex pair.

Korea’s central bank maintained its base rate unchanged at 3.5%, sending the KRW/USD pair higher in forex trading this morning.

Australia’s private new capital expenditure on buildings climbed by 3.6% during the fourth quarter, up from a 0.5% increase in the prior quarter, lending support to the AUD/USD forex pair.

The American Petroleum Institute reported that US crude stockpiles rose by 9.895 million barrels in the week ended February 17, versus an increase of 10.507 million barrels in the prior week, sending WTI crude oil prices higher this morning.

What’s happening: Shares of Baidu fell on Wednesday after the company released results for its fourth quarter.

What happened: The search engine giant reported better-than-expected revenues for its latest quarter.

Baidu’s net income almost tripled and the company announced a major buyback program.

How were the results: The Beijing, China-based company reported strong growth in profits for the three months ended December.

• Revenues came in at 33.08 billion yuan, which exceeded the consensus estimates of 32.01 billion yuan.
• Non-GAAP earnings came in at $2.21 per ADS, topping Wall Street expectations of $2.00 per ADS.
• Net income almost tripled to approximately 5 billion yuan in the quarter.

Why it matters: China lifted its strict zero-covid restrictions last year, and subsequently opened the borders for travellers.

Baidu, which generates most of its revenue from online advertisements, is now seeing a return of advertisers, with China’s internet sector emerging from regulatory hurdles and covid restrictions.

Revenue from Baidu Core declined 1% to 25.7 billion yuan during the quarter, while research and development expenses came in 21.4 billion yuan, with the company looking to integrate its ChatGPT-styled Ernie Bot into search, cloud, and smart cars.

“The Chinese AI market is on the verge of experiencing an explosive growth in demand, releasing unprecedented and exponential commercial value. Baidu stands as the best example of the long-term growth of China’s AI market and is advancing at the forefront of this new wave,” CEO Robin Li said. The AI-driven chatbot is expected to complete internal testing in March.

Baidu’s iQiyi reported 3% growth in revenues, in-line with expectations, amid a smaller-than-expected decline in online ad sales. iQiyi subscribers rose to 111.6 million, from 97 million in the year-earlier period.

Baidu’s adjusted EBITDA margin expanded by 800 bps to 25%. The company also announced a new share buyback program of up to $5 billion.

How shares responded: Baidu’s shares fell 2.6% to close at $137.12 on Wednesday, following the release of quarterly results. The stock has added around 15% year-to-date.

What to watch: Investors will continue monitoring developments around Ernie, which would significantly boost Baidu’s overall results.

The markets today

The euro will be in focus today ahead of the EU inflation report

Context: The EUR/USD fell on Wednesday as traders assessed economic data.

Details: The US dollar moved higher against its major peers on Wednesday as the latest economic reports eased recession concerns. The prospects of the Federal Reserve continuing aggressive rate hikes also supported the greenback.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose to 104.59 on Wednesday.

Data released on Tuesday showed a surprise rebound in US business activity in February, which climbed to its strongest level in eight months.

Germany’s annual inflation rate came in at 8.7% for January, higher than the 8.1% reading in December. The Ifo Business Climate indicator for Germany rose to an eight-month high of 91.1, from 90.1 a month ago.

The EUR/USD forex pair fell to 1.0607 on Wednesday. European stock markets also closed lower, with the STOXX Europe 600 index shedding 0.33% to 462.22, with weak earnings reports sending mining and banking stocks lower.

What are expectations: Traders await the release of inflation data from the Eurozone today. The bloc’s annual inflation rate is expected to decline to an eight-month low of 8.5% in January, from 9.2% in the previous month. Markets will also monitor major economic released from the US.

Other Markets: US trading closed mostly lower on Wednesday, with the Dow Jones index and S&P 500 down by 0.26% and 0.16%, respectively, and the Nasdaq 100 up by 0.05%.

Support & resistances for today

Market snapshot

What else to watch today

South Africa’s producer price inflation, Canada’s CFIP business barometer long-term optimism index, Turkey’s foreign exchange reserves and Central Bank of Turkey’s interest rate decision, UK’s CBI distributive trades survey’s retail sales balance, Mexico’s core consumer prices and monetary policy meeting minutes, Canada’s average weekly earnings, US GDP growth rate, initial jobless claims, Chicago Fed national activity index, continuing jobless claims, price index for personal consumption expenditures, natural gas stocks change, gasoline stocks change, crude oil stocks change, distillate stocks and Kansas City Fed’s manufacturing production index, Argentina’s consumer confidence indicator and economic activity estimator, as well as Brazil’s federal tax revenues.

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