The news shaping the markets today

Russians are fleeing to the border to avoid a military call-up for the ongoing war with Ukraine, following the announcement of a partial military mobilisation by President Vladimir Putin. Despite the continued geopolitical tensions, the US dollar index traded slightly lower this morning.

Australia’s services PMI rose to 50.4 in September, from 50.2 in the previous month. Although the company’s services sector expanded for the eighth consecutive month, overall growth remained below average, exerting pressure on the AUD/USD forex pair.

UK’s consumer confidence indicator fell to -49 in September, from a reading of -44 in the prior month. The indicator declining to a new record low sent the GBP/USD pair lower in forex trading this morning.

South Korea’s producer prices accelerated by 8.4% year-over-year in August, compared to 9.2% growth in the prior month. The KRW/USD forex pair came under pressure on the news.

US initial jobless claims rose by 5,000 to 213,000 in the week ended September 17, which sent the Dow Jones lower by more than 100 points on Thursday.

What’s happening: Shares of Costco Wholesale Corporation fell in after-hours trading on Thursday, despite the company reporting upbeat earnings for its fourth quarter.

What happened: Although rising prices of daily essentials impacted consumer spending, especially among the lower-income group, high demand for fresh food and fuel helped Costco record strong sales in the quarter

However, the company still announced a decline in one of its major metrics.

How were the results: The big-box retailer reported growth in revenues for the quarter that ended August 28.

• Revenues grew 15.2% year-over-year to $72.09 billion, topping Street expectations of $72.06 billion.
• Net income attributable to Costco climbed to $1.87 billion, or $4.20 per share, from $1.67 billion, or $3.76 per share, in the year-ago period. However, the figure came in much lower than the consensus estimate of $4.16 per share.

Why it matters: In late May, the retailer met market estimates with sales inching past expectations for the third quarter. Last month too, Costco reported sales of $17.55 billion for August, up 11% year-over-year, with 8.7% growth in same-store sales.

Strong spending by families with club memberships in the US benefited Costco, even though the lower-income group cut their spending due to surging prices of daily essentials. Moreover, Costco managed to keep gas prices below the national average, which provided a boost to its overall sales during the quarter.

The company’s comparable sales in the US surged 15.8% year-over-year, with international comps rising 2.9% last quarter. Membership revenues grew 7.5% to $1.327 billion.

However, the company’s gross margins narrowed by about 80 basis points to 10.18%, while overall inventories rose 26% versus last year.

How shares responded: Costco’s shares declined 2.4% to $475.30 in extended trading on Thursday, following the release of quarterly results. The stock has declined around 12% over the past six months.

What to watch: Traders will keep an eye on Costco’s performance in the holiday season, which generally provides a strong boost to sales. Overall holiday purchases are seen rising between 4% and 6% year-over-year to around $1.46 trillion, according to Deloitte’s holiday retail sales forecast, down from the 15% growth recorded in the year-ago period.

The markets today

European stocks will be in focus today ahead of a basket of economic reports

Context: European markets settled lower on Thursday, following interest rate decisions from several major central banks.

Details: The US Federal Reserve, Bank of England and Swiss central bank announced plans to raise interest rates at their respective policy meetings in a bid to combat surging inflation.

The US Fed raised rates by 75 basis points for a third straight time on Wednesday, with the central bank’s officials saying rates could rise to as high as 4.6% in 2023.

The Swiss National Bank lifted its benchmark interest rate to 0.5%, while the Bank of England raised rates for the seventh time in a row, announcing a hike of 50 basis points.

ECB board member Isabel Schnabel said interest rates should be raised to tackle inflation, despite the common bloc facing an economic downturn.

Market sentiment was also hurt by economic data. Eurozone’s consumer confidence indicator declined by 3.8 points to -28.8 in September, reaching its weakest level since the series started in 1985.

The pan-European Stoxx 600 fell 1.79% to close at 399.76 on Thursday, hitting its weakest level since February 2021. Most sectors closed in the negative zone, with the exception of banks and basic resources, which traded almost flat in the session. Technology and travel-related stocks were among the worst performers on Thursday.

The STOXX 600 is trending to record losses for the second straight month, with Europe facing an energy crisis.

London’s FTSE 100 index fell 1.08% to close at 7,159.52 on Thursday, following the Bank of England’s rate hike announcement. Germany’s DAX 40 and France’s CAC 40 lost 1.84% and 1.87%, respectively.

What to watch: Traders await the manufacturing PMI, services PMI and composite PMI data from the Eurozone today. The S&P Global Eurozone manufacturing PMI, which was revised lower to 49.6 in August, is expected to decline further to 48.3 in September. The services PMI is projected to decline to 49.2, from a previous reading of 49.8.

Other Markets: US indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.35%, 0.84% and 1.17%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Norway’s credit indicator, the Philippines’ business confidence and consumer confidence, Austria’s industrial production, Spain’s gross domestic product, Switzerland’s current account, France’s manufacturing PMI, services PMI and composite PMI, Germany’s manufacturing PMI, services PMI and composite PMI, Poland’s unemployment rate, Taiwan’s industrial production and retail sales, Turkey’s tourist arrivals, UK’s manufacturing PMI, services PMI, composite PMI and CBI distributive trades survey’s retail sales balance, Ireland’s wholesale price inflation, Netherlands’ current account, Vietnam’s foreign direct investment, India’s value of deposits, foreign exchange reserves and value of loans, Chile’s producer prices, Canada’s retail sales, wholesale sales and manufacturing sales, US composite PMI, manufacturing PMI, services PMI, Baker Hughes crude oil rigs and Fed Chair Powell speech, as well as Argentina’s leading economic index.

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