The news shaping the markets today

Ukraine’s forces shot down 340 Iranian drones launched by Russia during the war, Ukrainian Air Force spokesperson Yuriy Ignat said on Thursday. The US dollar index rose on continued geopolitical tensions.

Australia’s retail sales fell by 0.2% to A$35.02 billion in October, after 0.6% growth in the previous month. The country recording its first decline in retail trade in 2022 exerted pressure on the AUD/USD forex pair.

South Korea’s consumer prices rose 5% year-over-year in November 2022, below market expectations of 5.1%, which sent the KRW/USD pair higher in forex trading this morning.

Brazil reported a trade surplus of $6.7 billion in November, versus a $1.1 billion gap in the year-ago period. However, the BRL/USD forex pair remained flat after the news.

Mexico’s S&P Global manufacturing PMI improved to 50.6 in November, from 50.3 a month ago. Despite this, the MXN/USD pair declined in forex trading this morning.

What’s happening: Kroger Co reported better-than-expected results for its third quarter on Thursday.

What happened: Apart from upbeat results, the Cincinnati, Ohio-based company raised its projections for the year, citing steady grocery demand.

Despite sales growth and raised guidance, the company’s stock edged lower on Thursday.

How were the results: The company reported single-digit growth in sales for the third quarter ended November 5, with both top- and bottom-line metrics topping market views.

• Sales rose 7.2% year-over-year to $34.19 billion, surpassing the consensus estimates of $33.95 billion.
• Adjusted earnings came in at 88 cents per share, exceeded Street expectations of 82 cents per share.

Why it matters: With US inflation hovering near four-decade highs, customers are holding back discretionary purchases. However, retailers selling essential items have been able to attract more footfall.

The country’s biggest grocer by revenue, Walmart, also increased its forecast for the full year after reporting strong results for the latest quarter.

Kroger managed to use its large network to negotiate lower prices with suppliers and keep prices below its peers, bringing in more customers to its outlets and gaining market share from smaller rivals.

The company’s same-store sales, excluding fuel, surged 6.9%, topping market expectations of 4.5%. Operating, general and administrative expenses rose 8% from a year ago to $5.6 billion, sending operating income lower by 3.1% to $841 million in the quarter.

Despite market share gains, Kroger ended the quarter with 15.2% growth in inventories to $8.7 billion as of November 5, 2022.

Management raised their adjusted earnings guidance for the full year to $4.05-$4.15 per share, from the previous forecast of $3.95-$4.05 per share. They also raised their full-year adjusted same-store sales growth projection from 4.0%-4.5% to 5.1%-5.3%.

In October, Kroger had announced plans to buy its rival, Albertsons Companies, in a transaction valued at $24.6 billion. However, the deal is facing pushback from officials, who believe the acquisition will hurt competition.

How shares responded: Kroger’s shares gained as much as 4% in the pre-market session, but ended the day lower by 1.6% at $48.41 on Thursday. The stock has gained around 7% year to date.

What to watch: Investors will keep an eye on the company’s acquisition of Albertsons, which is continuing to face antitrust-related hurdles.

The markets today

The British pound will be in focus today after closing higher on Thursday

Context: The GBP/USD forex pair surged to its strongest level since August on Thursday, with some weakness in the US dollar.

Details: US Fed Chairman Jerome Powell said during his speech at the Brookings Institution that the central bank could begin scaling back its interest rate hikes as soon as December. The Federal Reserve raised rates by 75bps at its November meeting, announcing the sixth hike in a row.

The aggressive pace of rate hikes by the Fed has sent the greenback sharply higher this year. Markets are now seeing an 80% probability of the US central bank increasing rates by 50 basis points at its December meeting.

The US dollar index, which measures the greenback’s performance versus a basket of major rivals, fell around 1.1% to 104.73 on Thursday.

Sentiment for the sterling was also supported by economic data. The S&P Global/CIPS manufacturing PMI for UK rose to 46.5 in November, versus a preliminary reading of 46.2 and up from 46.2 in the prior month.

The GBP/USD jumped around 1.6% to 1.2256 on Thursday. The forex pair had recorded its biggest monthly gain since July 2020 in November. Sterling had climbed around 5% against the US dollar last month, following a 2.7% increase in October.

What are expectations: With no major economic data from the UK due today, traders will focus on the US jobs report. The US economy is expected to add 210,000 jobs in November, after adding 261,000 jobs in previous month.

Markets await data on UK services PMI, composite PMI and new car sales, scheduled for release on Monday.

Other Markets: US indices closed mostly lower on Thursday, with the Dow Jones index and S&P 500 down by 0.56% and 0.09%, respectively, and the Nasdaq 100 up by 0.1%.

Support & resistances for today

Market snapshot

What else to watch today

Germany’s balance of trade, France’s industrial production and government budget value, Brazil’s IPC-Fipe inflation and industrial production, Spain’s Unemployment change and tourist arrivals, Eurozone’s producer prices, Mexico’s foreign exchange reserves, India’s value of loans, value of deposits and foreign exchange reserves, Singapore’s manufacturing PMI, Canada’s unemployment rate and employment change, US unemployment rate, nonfarm payrolls, average hourly earnings, Baker Hughes crude oil rigs and total vehicle sales, Argentina’s tax revenue, as well as Italy’s car registrations.

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