The news shaping the markets today

US officials said on Wednesday that Washington was seeking support from its allies for fresh sanctions on China in case it provides military support to Russia for the ongoing war in Ukraine. The safe-haven US dollar index rose this morning.

South Korea’s S&P Global manufacturing PMI came in unchanged at 48.5 in February. This being the eighth consecutive month of contraction exerted pressure on the KRW/USD forex pair.

Japan’s companies raised their spending on plant and equipment by 7.7% year-over-year in the fourth quarter, which sent the JPY/USD pair lower in forex trading this morning.

Australia’s private house approvals fell by 13.8% to 7,560 units in January, exerting pressure on the AUD/USD forex pair.

Russia’s retail sales contracted by 6.6% year-over-year in January. The figure was much better than market expectations of an 8.6% decline, which sent the RUB/USD pair higher in forex trading this morning.

What’s happening: Shares of Lowe’s Companies fell on Wednesday, after the company released results for its fourth quarter.

What happened: The home improvement retailer reported weaker-than-expected sales for its latest quarter amid fewer transactions.

Lowe’s shares declined, despite the company reporting double-digit earnings growth, which topped expectations.

How were the results: The Mooresville, North Carolina-based company reported single-digit growth in sales for the fourth quarter.

• Sales rose 5.2% year-over-year to $22.45 billion, missing the consensus estimates of $22.69 billion.
• Adjusted earnings jumped 28% to $2.28 per share, beating Wall Street expectations of $2.21 per share.

Why it matters: US demand for home improvement items contracted during the quarter due to a decline in household budgets amid higher borrowing costs with the Fed continuing to raise interest rates.

A tight labour market in the country also resulted in retailers having to increase employee wages. Lowe’s awarded $220 million in bonuses for employees during the fourth quarter, with the company looking to invest an additional $350 million in wages for its frontline workers this year.

Lowe’s comparable sales fell 1.5%, while comparable sales for its US home improvement business declined 0.7% during the quarter. The company’s main rival, Home Depot released results last week, which showed global and US comparable sales down by 0.3%.

Lowe’s operating margins shrank 108 basis points to 7.59%, while operating income contracted by 7.8% to $1.7 billion.

Management guided to revenues of $88-$90 billion for fiscal 2023, below market expectations of $90.48 billion. The company expects its annual comparable sales to be flat to down 2%. Management projected earnings of $13.60-$14.00 per share, against the consensus estimates of $13.79 per share.

How shares responded: Lowe’s shares fell 5.6% to close at $194.31 on Wednesday, following the release of quarterly results. The stock has lost around 12% over the past month.

What to watch: Investors will keep an eye on the US Federal Reserve’s interest rate decision as well as the state of the labour market in the country.

The markets today

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

Context: The EUR/USD forex pair gained on Wednesday as traders assessed economic data.

Details: The recent PMI survey signalled the eighth consecutive month of contraction in Eurozone’s manufacturing output, while China’s factory activity figures came in better than expectations.

Eurozone’s S&P Global manufacturing PMI fell to 48.5 in February, from 48.8 in January. China’s official NBS manufacturing PMI rose to 52.6 in February, recording the second consecutive month of expansion in the country’s factory activity.

Germany’s consumer price inflation came in at 8.7% year-over-year in February, above market estimates of 8.5%. This fuelled speculations of another rate hike by the European Central Bank and lent support to the euro on Wednesday.

Earlier this week, Spain and France recorded an increase in inflation. Joachim Nagel said that the ECB might need significant interest rate hikes beyond March to tackle accelerating inflation.

A decline in the US dollar also lent support to the EUR/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.4% to 104.48 on Wednesday.

The index added almost 3% in February, recording its first monthly gain after four months of losses.

The EUR/USD forex pair rose by around 0.9% to 1.0671 on Wednesday.

What are expectations: Traders await economic reports on the Eurozone’s inflation rate and unemployment rate today. The region’s consumer price inflation is expected to ease to 8.4% year-over-year in February, from 8.6% in January. Analysts expect the unemployment rate to remain unchanged at 6.6% in January.

Other Markets: US trading indices closed mostly lower on Wednesday, with the S&P 500 and Nasdaq 100 down by 0.47% and 0.86%, respectively, and the Dow Jones index up by 0.02%.

Support & resistances for today

Market snapshot

What else to watch today

France’s government budget value, Brazil’s gross domestic product and IPC-Fipe inflation, Spain’s unemployment change, Italy’s unemployment rate and consumer price inflation, Mexico’s foreign exchange reserves, unemployment rate and government budget value, Turkey’s MPC meeting summary, balance of trade and foreign exchange reserves, European Central Bank’s monetary policy meeting accounts, Singapore’s manufacturing PMI, as well as US initial jobless claims, unit labour costs, nonfarm business sector labour productivity, continuing jobless claims and natural gas stocks change.

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