The news shaping the markets today

Russia said it was ready to work on the safety zone around the Zaporizhzhia Nuclear Power Plant. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose this morning.

China’s annual inflation rate accelerated to 2.1% in January, from 1.8% in the previous month, exerting pressure on the CNY/USD forex pair.

Japan’s producer prices rose 9.5% year-over-year in January, following a 10.5% increase in December, sending the JPY/USD pair lower in forex trading this morning.

Mexico’s central bank hiked its benchmark policy rate by 50bps to 11%, above market expectations of a 25bps increase, which exerted pressure on the MXN/USD forex pair.

New Zealand’s BusinessNZ Performance of Manufacturing Index rose to 50.8 in January, from 47.2 a month ago. Despite this, the NZD/USD pair declined in forex trading this morning.

What’s happening: Shares of PepsiCo rose on Thursday, after the company released results for its fourth quarter.

What happened: The Frito-Lay maker reported quarterly results that exceeded market expectations.

PepsiCo also announced a dividend hike, which provided further support to its stock on Thursday.

How were the results: The Purchase, New York-based company reported growth in sales for the three months ended in December, which topped market views.

• Sales climbed 10.9% year-over-year to $28 billion, beating the consensus estimates of $26.84 billion.
• Core earnings rose 9.1% year-over-year to $1.67 per share, topping the Wall Street expectations of $1.65 per share.

Why it matters: PepsiCo announced several rounds of price increases last year due to rising freight and commodity costs. Also, a sharp appreciation in the US dollar impacted international sales.

Organic sales volumes declined 2% following average price hikes of about 16% over the three month period.

Net revenues from Frito-Lay North America jumped 25% year-over-year, while revenues from Quaker Foods North America and PepsiCo Beverages North America surged 16% and 6%, respectively.

However, due to rising expenses, the company’s operating margins shrank 723 basis points to 2.9%, while operating income declined 68.2% to $815 million.

The company raised its annualised dividend by 10% to $5.06 per share. Management also guided to organic revenue growth of 6% and core constant currency earnings growth of 8% for fiscal 2023. They projected earnings of $7.20 per share, versus market expectations of $7.28 per share.

How shares responded: PepsiCo’s shares rose 1% to close at $172.78 on Thursday, following the release of quarterly results. The stock has lost around 3% over the past month.

What to watch: Investors will keep an eye on inflation rates, which could continue to impact the company’s margins this year.

The markets today

The Canadian dollar will be in focus today ahead of jobs data from the country

Context: The CAD/USD forex pair fell slightly on Thursday, paring gains made earlier in the week.

Details: The CAD/USD forex pair rose in early trading on Thursday but reversed its direction amid a decline in stock markets, as investors moved to the sidelines waiting for Canada’s jobs data. The report is expected to provide more insight into the economy’s strength.

US equity markets turned negative after opening on a strong note, with the Dow Jones index shedding around 250 points on Thursday.

Canada’s S&P/TSX Composite index also declined 0.40% to settle at 20,597.75 after surging to the highest level since June last year earlier in the session. Losses in healthcare and basic materials stocks exerted pressure on the index.

The price of crude oil, one of Canada’s major exports, fell 0.5% to settle at $78.06 per barrel on Thursday, adding further pressure on the loonie.

The CAD/USD pair edged lower by around 0.1% to $1.3458 on Thursday. Canada’s government bond yields rose on Thursday, mirroring the move in US Treasuries.

What are expectations: Traders await the release of jobs data from Canada today. The unemployment rate in the country, which was at 5% in December 2022, is expected to increase to 5.2% in January. Analysts expect the Canadian economy to add 15,000 jobs in January, following job adds of 104,000 in the previous month.

Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 index up by 0.33%, 0.72%, 0.96% and 0.62%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Turkey’s industrial production and unemployment rate, UK’s GDP growth rate, goods trade balance, industrial production, manufacturing production, balance of trade, construction orders, construction output and business investment, Italy’s industrial production, Russia’s inflation rate, GDP and Central Bank of Russia’s interest rate decision, India’s value of deposits, foreign exchange reserves, value of loans, industrial production and manufacturing output, Mexico’s industrial production and government budget value, Germany’s current account, Brazil’s industry confidence indicator, US University of Michigan consumer sentiment, Baker Hughes crude oil rigs and government budget statement, as well as China’s new yuan loans, outstanding yuan loans, total social financing and money supply M2.

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