The news shaping the markets today

UK’s retail sales grew 0.6% year-over-year in December, slowing from 1.8% in the previous month. Despite the deceleration, the GBP/USD forex pair rose following the news.

Australia’s retail sales surged 7.3% in November, surpassing market expectations of 3.9% growth, which sent the AUD/USD pair higher in forex trading this morning.

South Korea’s current account surplus shrank to $7.16 billion in November, from a year-ago surplus of $9.18 billion. However, the KRW/USD forex pair responded positively to the news.

The Philippines announced a widening of its trade deficit to $4.71 billion in November, from $2.05 billion in the year-ago month. This was the largest trade deficit since April 2017 and exerted pressure on the PHP/USD pair in forex trading this morning.

Indonesia’s retail sales surged 10.8% year-over-year in November, compared to 6.5% growth in the previous month. This was the second straight month of growth in retail sales, which provided support to the IDR/USD forex pair.

What’s happening: Take-Two Interactive Software announced plans to buy Zynga in a deal valued at $11.04 billion.

What happened: The acquisition announcement sent shares of the Farmville creator sharply higher on Monday.

However, investors in Take-Two seemed bearish on the transaction, sending the stock on a steep downturn.

Why it matters: People spent more time on entertainment while being forced to remain indoors amid the covid-19 restrictions. However, videogame sales declined with the gradual reopening of the US economy and consumers shifted to mobile gaming.

The elevated demand for mobile gaming has brought several new entrants in the segment and witnessed other gaming companies expanding their portfolios by acquiring mobile gaming firms. Activision Blizzard acquired King Digital Entertainment in 2016, while Electronic Arts bought Glu Mobile last year.

Mobile games currently contribute around 10% of Take-Two’s overall sales. After the Zynga acquisition, the contribution is expected to increase to over 50%. “This strategic combination brings together our best-in-class console and PC franchises, with a market-leading, diversified mobile publishing platform that has a rich history of innovation and creativity,” Take-Two CEO Strauss Zelnick said.

Take-Two will pay $9.86 per share for Zynga, which represents a 64% premium over Zynga’s closing price last week. Investors believe Take-Two is overpaying for Zynga, that too at a time when growth stocks are recording steep losses.

The companies expect the transaction to close in the first quarter of fiscal 2023. Take-Two projected annual cost savings of around $100 million within the first two years of the completion of the deal.

How shares responded: Shares of Zynga jumped 40.5% to close at $8.43 on Monday, while Take-Two’s stock plummeted 13.1% to settle at $142.99. Take-Two’s stock has lost around 30% over the past year.

What to watch: Investors will keep an eye on regulatory approvals of the transaction. Markets will also monitor Take-Two’s plans to fend off competition from Activision Blizzard and Electronic Arts.

The markets today

The Canadian dollar will be in focus today after recording losses on Monday.

Context: The CAD/USD forex pair settled lower on Monday amid a decline in oil prices.

Details: The loonie had climbed on Friday, finding support from better-than-expected jobs data from Canada. The country added 54,700 jobs in December, sharply higher than the consensus estimate of 24,500. The unemployment rate eased to 5.9%, from 6.0% in the previous month, hitting the lowest level since February 2020.

The CAD/USD forex pair was also supported by a decline in the greenback after the US reported weak nonfarm payrolls numbers on Friday.

However, the US dollar strengthened with investors expecting the Federal Reserve to hike interest rates faster than earlier anticipated in a bid to combat rising inflation.

A decline in prices for crude oil, which is one of Canada’s major exports, also exerted pressure on the loonie. WTI crude prices fell around 0.9% to close at $78.23 per barrel on Monday amid concerns over the rapid spread of the Omicron variant.

The CAD/USD forex pair fell around 0.3% to settle at 1.2680 on Monday.

What to watch: With no major economic reports due to be released from Canada this week, traders will focus on data from the US and the Fed’s signals on when it intends to raise interest rates.

Rising covid-19 cases remains a major concern for markets, with total global infections surging past 311 million.

Other Markets: US indices closed mostly lower on Monday, with the Dow Jones index and S&P 500 down by 0.45% and 0.14%, respectively, and the Nasdaq 100 down 0.14%.

Support & resistances for today

Market snapshot

What else to watch today

Turkey’s current account, Spain’s industrial production, Italy’s retail sales, UK’s labour productivity, South Africa’s manufacturing production, Brazil’s inflation rate, Mexico’s industrial production, as well as US NFIB small business optimism index, Redbook index, IBD/TIPP economic optimism index, API crude oil stocks and Fed Chair Powell testimony.