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Coca-Cola shares rise on fizzy Q1 print

The news shaping the markets today

Twitter’s shares skyrocketed almost 6% after Elon Musk struck a deal to buy the social media company for $44 billion. Nasdaq 100 gained 1.29% on Monday.


Russia continued its attacks on Ukraine, launching missile strikes on five railroad stations. However, the RUB/USD forex pair rose following the news.


Japan’s unemployment rate eased to a one-year low of 2.6% in March, from 2.7% in February, lending support to the JPY/USD pair in forex trading this morning.


South Korea’s economy expanded 0.7% in the three months to March, compared to 1.2% growth in the prior quarter. The KRW/USD forex pair traded higher on the news.


Mexico’s economic activity rose 2.5% year-over-year in February, following 1.8% growth in the earlier month. Despite this, the MXN/USD pair remained under pressure.

 

What’s happening: Shares of Coca-Cola Company gained on Monday, after the company reported its first-quarter earnings ahead of expectations.

What happened: Apart from strong quarterly results, Coca-Cola issued an upbeat forecast for 2022.

However, the company warned of the overall environment remaining challenging citing several issues.

How were the results: The beverages giant reported strong growth in sales for the first quarter, with both top- and bottom-line metrics exceeding market views.

  • Net revenue grew 16% year-year-year to $10.49 billion, exceeding the consensus estimate of $9.83 billion.
  • Adjusted earnings came in at 64 cents per share, which also topped Street views of 58 cents per share for the quarter.

Why it matters: Consumers resuming away-from-home dining led to an increase in demand for beverages, driving 18% growth in Coca-Cola’s organic revenues. The sales of the company’s concentrate surged 11%, while the price/mix improved by 7%. Its unit case volumes also climbed 8% in the quarter.

The company was forced to hike prices during the quarter due to rising costs of materials and logistics.

Coca-Cola’s operating margins widened 230 basis points to 32.5%, while comparable operating margins rose by 40 basis points to 31.4%. Its operating income grew 25% to $3.4 billion.

As of April 1, 2022, the company held cash and equivalents worth $10.4 billion.

Coca-Cola said the suspension of its business in Russia could impact net revenues by 1% to 2% in fiscal 2022. However, management still expects organic revenues to grow between 7% and 8% and comparable earning between 5% and 6%. The company projected free cash flows of around $10.5 billion and cash flows from operations of $12 billion for the year.

CFO John Murphy said during the earnings call that the overall environment remains “fairly challenging” due to increased labour costs and rising covid-19 cases in several parts of the world.

How shares responded: Coca-Cola’s shares rose 0.3% to close at $65.47 on Monday, following the release of quarterly results. The stock has surged over 11% year to date.

What to watch: Investors will keep an eye on covid-19 cases, developments in Ukraine and accelerating inflation levels.

The markets today

Gold will be in focus today after closing below the major $1,900 mark on Monday

 

Context: Gold prices fell on Monday, recording their weakest settlement since late February.

Details: Safe-haven gold failed to garner investor support despite a decline in risk sentiment on further developments around the Russia-Ukraine war. While offloading global equities and other risky assets, investors replaced these with US dollar and Treasury investments in their portfolios.

US stocks declined during early trading on Monday but recovered sharply toward the end of session. Wall Street had staged a sharp selloff on Friday, which saw the Dow Jones index losing around 1,000 points.

Markets also monitored the rise in covid-19 cases in China and the imposition of strict restrictions, which poses a risk to the pace of rebound in the global economy.

However, prospects of rate hikes by the US Federal Reserve supported the greenback, making gold a less attractive asset. The ICE US Dollar Index, which measures the currency’s performance versus six major peers, gained around 0.5% to 101.75 on Monday, after trading as high as 101.86 earlier in the session.

Gold for June delivery declined $38.30, or 2%, to close at $1,896 an ounce, representing the weakest finish since February 25. The safe-haven metal had shed 2.1% last week.

May silver fell 59 cents, or 2.4%, to settle at $23.67 an ounce, also recording the weakest finish since February 16. The white metal had declined by around 5.6% last week. July copper lost 2.8% to reach $4.472 a pound, while July platinum slipped 2.4% to $905 an ounce and June palladium dipped 10.7% to close at $2,122.10 an ounce on Monday.

What to watch: Markets will keep an eye on rising covid-19 cases and further announcements from the Federal Reserve. The ongoing war in Ukraine will also remain in focus.

Other Markets: European trading indices closed lower on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 down by 1.88%, 1.54%, 2.01% and 1.81%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD – 1.0722 and 1.0730 Positive
AUD/USD – 0.7177 and 0.7195 Positive
Gold – 1898.70 and 1903.30 Positive
Silver – 23.731 and 23.849 Positive
Copper – 4.4945 and 4.5065 Positive

 

Market snapshot

What else to watch today

UK’s public sector net borrowing, South Africa’s composite leading business cycle indicator, Mexico’s retail sales, Canada’s manufacturing sales, US durable goods orders, Redbook index, S&P CoreLogic Case-Shiller 20-city home price index, FHFA house price index, new home sales, Richmond Fed composite manufacturing index, Dallas Fed services index, CB consumer confidence and API crude oil stocks, Brazil’s government revenues, as well as Argentina’s retail sales.

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