The news shaping the markets today

Ukraine ignored an ultimatum from Russia to surrender its eastern city of Sievierodonetsk after the US promised an aid of $1 billion worth of weapons. The safe-haven US dollar index rose this morning.

Singapore’s unemployment rate declined to 2.2% in the first quarter, from 2.4% in the fourth quarter last year. Despite this being the lowest reading since Q3 2019, the SGD/USD forex pair remained under pressure.

New Zealand’s BusinessNZ Performance of Manufacturing Index improved to 52.9 in May, compared to an eight-month low of 51.2 in the prior month. However, the latest reading remained below the long-term average of 53.1, sending the NZD/USD pair lower in forex trading this morning.

Argentina’s central bank raised its “Leliq” interest rate from 49% to 52% at its recent meeting, announcing the sixth rate hike this year. However, the ARS/USD forex pair traded mostly flat after the news.

Canada’s wholesale sales declined 0.5% to C$79.8 billion in April, compared to a preliminary estimate of 0.2% growth. However, the CAD/USD pair rose slightly in forex trading this morning.

What’s happening: Shares of Kroger fell on Thursday, despite the company reporting better-than-expected results for its first quarter.

What happened: Kroger reported strong quarterly results and raised its profit forecast for the year.

However, investors grew concerned after the Cincinnati, Ohio-based company reported a decline in one of its major matrices for the latest quarter.

How were the results: The retailer reported sales growth for its first quarter, with both top- and bottom-line figures exceeding market views.

• Sales grew 8% year-over-year to $44.60 billion, exceeding the consensus estimate of $44.24 billion.
• Adjusted earnings came in at $1.45 per share, up 21.8% from the year-ago period, surpassing Street expectations of $1.30 per share.

Why it matters: Some of the major retailers, including Target and Walmart, have raised concerns over the impact of surging inflation on consumer shopping habits. Despite this, companies like Costco Wholesale and now Kroger have managed to weather the inflation storm, with customers continuing to spend on groceries and other necessities.

According to the US Commerce Department, although overall retail sales in the country declined by 0.3% in May amid rising gasoline prices, grocery store sales had grown 4.6%.

Kroger’s overall same store sales, excluding fuel, rose 4.1% during the quarter, below market expectations of 4.2%. The same store sales of the company’s private-label brands rose 6.3%.

Kroger’s gross margins came in at 21.6%, with the FIFO gross margin rate, excluding fuel, shrinking 26 basis points year-over-year. The company also warned that its margins could remain under pressure in the back half of the year due to higher supply chain expenses.

Kroger raised its 2022 earnings forecast by 10 cents to between $3.85 per share and $3.95 per share. Management projected same-store sales growth of 2.5%-3.5%. Both projections were broadly in-line with market expectations.

How shares responded: Kroger’s shares fell 2.1% to close at $49.82 on Thursday, following the release of quarterly results. The stock has gained over 10% year to date.

What to watch: Investors will keep an eye on the inflation rate and supply chain issues.

The markets today

European stocks will be in focus today ahead of inflation data from the common bloc

Context: Markets in Europe closed lower on Thursday amid hawkish policy actions from several central banks.

Details: Investors around the world have been reacting to the US Federal Reserve’s recent rate hike, which took the benchmark funds rate higher by 75 bps to a range of 1.5% to 1.75%.

The Bank of England also announced a fifth consecutive rate hike, with spiking inflation in the country. The Monetary Policy Committee raised the Bank Rate by 25 basis points to 1.25% at its latest meeting. London’s FTSE 100 fell 3.14% to settle at 7,044.98 on Thursday.

The Swiss National Bank also announced its first rate hike since 2007, raising rates by 50 basis points.

On the economic data front, Eurozone’s hourly labour costs climbed by 3.2% year-over-year in the first quarter. while Italy’s annual inflation rate was revised lower to 6.8% for May.

The pan-European Stoxx 600 index fell 2.47% to close at 402.88 on Thursday, with tech shares leading the losses, as a higher interest rate environment is considered negative for growth- sectors. Shares of Zalando SE were among the worst performers, declining more than 12% to the bottom of the Stoxx 600 index.

German DAX 40 and France’s CAC 40 fell 3.31% and 2.39%, respectively.

What to watch: Traders await inflation data from the Eurozone today. The bloc’s annual inflation rate is expected to accelerate to 8.1% in May, from 7.4% in the previous two months. The annual core inflation rate is also projected to increase to a new record high of 3.8% in May.

Other Markets: US indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 2.42%, 3.25% and 4.02%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Italy’s construction output and balance of trade, India’s value of loans, value of deposits and foreign exchange reserves, Canada’s raw materials prices, foreign investment in securities and producer prices, US industrial production, manufacturing production, capacity utilization, CB leading index and Baker Hughes crude oil rigs, Russia’s GDP annual growth rate, Indonesia’s motorbike sales as well as Brazil’s IBC-Br economic activity index.

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