The news shaping the markets today

Ukraine said its military had shot down six Russian balloons over Kyiv that were suspected of carrying corner reflectors and reconnaissance equipment. The safe-haven US dollar index fell this morning.

China’s average new home prices fell by 1.5% year-over-year in January. However, the pace being the same as the previous month lent support to the CNY/USD forex pair.

Japan posted a trade deficit of ¥3,496.6 billion in January, versus a year-ago gap of ¥2,199.4 billion. However, analysts were expecting a wider gap of ¥3,871.5 billion, which sent the JPY/USD pair higher in forex trading this morning.

Australia’s unemployment rate unexpectedly rose to 3.7% in January, from around a five-decade low of 3.5% recorded in December, lending support to the AUD/USD forex pair.

New Zealand’s visitor arrivals jumped by 5740.9% year-over-year to 359,855 in December, sending the NZD/USD pair higher in forex trading this morning.

What’s happening: Shares of Cisco Systems gained in after-hours trading on Wednesday, following the release of quarterly results.

What happened: The networking equipment provider reported strong results for its latest quarter.

Cisco also raised its guidance for the full year, sending its stock higher in the extended trading session.

How were the results: The San Jose, California-based company reported single-digit growth in sales for its fiscal second quarter ended January 28.

• Revenue rose 7% year-over-year to $13.6 billion, which exceeded the consensus estimates of $13.43 billion.
• Adjusted earnings came in at 88 cents per share, topping Wall Street expectations of 85 cents per share.

Why it matters: Cisco had suffered from several issues last year, including chip shortages and higher stock build-up. The company is now looking to clear the backlog orders. Cisco has also benefitted from several companies adopting cloud and digital technologies to support their hybrid working environment.

“With Cisco’s strong Q2 performance, our fiscal 2023 is shaping up to be a great year. The modern, highly secure networks we are building serve as the backbone of our customers’ technology strategy. This, combined with the success of our ongoing business transformation and operational discipline gives me confidence in our future,” CEO Chuck Robbins said during the earnings call.

Management guided to revenue growth of 11%-13% and adjusted earnings between 96 cents and 98 cents per share in the fiscal third quarter.

For the full year 2023, the company projected revenue growth of 9%-10.5%, up from the prior forecast of 4.5%-6.5%. Management also guided to adjusted earnings of $3.73-$3.78 per share, higher than market expectations of $3.55 per share.

Cisco also boosted its quarterly dividend by 3% to 39 cents per share.

How shares responded: Cisco’s shares climbed 3.2% to $50.01 in the extended trading session on Wednesday, following the release of quarterly results. The stock has added 1% year-to-date.

What to watch: Investors will continue monitoring Cisco’s upcoming orders, with the company targeting to double orders by the end this fiscal year.

The markets today

The US dollar will be in focus today ahead of a basket of economic reports

Context: The US dollar surged to a six-week high, following the release of higher-than-expected retail sales.

Details: Data released on Wednesday showed that US retail sales had risen by 3.0% in January, the most in around two years. The figure was also higher than market expectations of 1.8% growth.

The hotter-than-expected retail sales report raised speculations of the US Federal Reserve continuing its monetary tightening policy for at least some time to come. Economists at Deutsche Bank now see the Fed hiking interest rates to as much as 5.6%, versus the earlier expectations of a 5.1% peak.

A report released on Tuesday showed US consumer prices rising 0.5% in January, following higher rental and food costs, compared to a 0.1% rise in December. The annual inflation rate came in at 6.4% in January, down from 6.5% in the previous month, but above estimates of 6.2%.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.6% to 103.92 on Wednesday, after jumping to a six-week high level of 104.11.

The USD/JPY forex pair climbed to 134.355 to its highest level since January 6, but settled at at 134.170, up around 0.8% on Wednesday.

The GBP/USD forex par fell around 1.2% to 1.2032 on Wednesday, after data showed British inflation easing more than expected in January.

What are expectations: Traders await the release of data on producer price inflation, Philadelphia Fed manufacturing index and initial jobless claims today. Producer prices for final demand in the US, which fell 0.5% in December, are expected to increase 0.2% in January. Analysts expect the Philadelphia Fed manufacturing index to rise to -7 in February, from -8.9 in January. The number of persons filing for jobless benefits had risen to 196,000 in the week ending February 4 and is expected to rise further to 198,000 in the latest week.

Other Markets: European indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 index up by 0.55%, 0.82%, 1.21% and 0.42%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Indonesia’s value of loans and Bank Indonesia interest rate decision, Italy’s balance of trade, Spain’s balance of trade, South Africa’s value of recorded building plans, Turkey’s gross foreign exchange reserves, Brazil’s IBC-Br index of economic activity, US building permits, housing starts and natural gas stocks change, as well as China’s foreign direct investment.

ADS Securities London Limited “ADSS” is an execution-only service provider. This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or investment objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by ADSS that any particular investment, security, transaction or investment strategy is suitable for any specific person. To the extent that any content in this material is construed as investment research, you must note and accept that the content was not prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.  This material may contain links to third party websites, and any content, or use of your personal data by any third party websites is not the responsibility of ADSS or any member of the ADSS Group.