The news shaping the markets today

Japan’s household spending fell 1.3% in real terms in November, following a 0.6% decline in the previous month. The latest reading also missed market expectations of 1.6% growth, which exerted pressure on the JPY/USD forex pair.

The Philippines reported a 26.5% year-over-year surge in manufacturing production in November, following 25.9% growth a month ago. Despite this being the eighth straight month of growth in manufacturing output, the PHP/USD pair declined in forex trading this morning.

Argentina’s industrial production climbed 10.1% from a year ago in November, versus 4.4% growth in October. However, the ARS/USD forex pair declined slightly due to strength in the US dollar.

Kuwait’s inflation rate slowed to 3.8% in October, from a more than five-year high of 4.1% in the previous month. However, the KWD/USD pair remained flat in forex trading this morning.

Canada’s trade surplus widened to C$3.13 billion in November, topping market views of C$2.03 billion. With exports surging 3.8% to a record high of C$58.6 billion, the CAD/USD forex pair climbed after the news.

What’s happening: Shares of Walgreens Boots Alliance fell on Thursday, despite the company reporting upbeat earnings for its first quarter.

What happened: More customers visited Walgreens stores for covid-19 booster vaccination and at-home test kits, which drove the company’s quarterly results.

Although Walgreens boosted its guidance for the year, the stock failed to record gains on Thursday.

How were the results: The drugstore chain reported growth in both sales and earnings for its first quarter.

• Sales rose to $33.9 billion in the quarter, from $31.4 billion in the year-ago period, topping market expectations of $32.74 billion.
• Adjusted earnings surged 53% to $1.68 per share, exceeding the consensus estimate of $1.33 per share.
• Net income climbed to $3.58 billion, or $4.13 per share, versus a net loss of $308 million, or 36 cents per share, in the year-ago quarter.

Why it matters: People began stocking up on at-home covid-19 tests, helping Walgreens report upbeat quarterly sales. Customers also purchased more cough, cold and flu medicines during the quarter. The company’s pharmacy department recorded 6.8% year-over-year growth in same-store sales.

Overall same-store sales at Walgreens climbed 10.6%, representing the strongest growth in over two decades. The company’s digital sales jumped 88%, with online sales averaging $30 per order, compared to $20 in stores.

Walgreens administered 15.6 million vaccines in the first quarter, resulting in a total of 56 million till date. “Our testing and vaccinations are tailwinds for our business,” CEO Rosalind Brewer said during the earnings call.

Management guided to administering 30 million vaccines at the company’s stores in fiscal 2022, while saying that the figure could be higher depending on how rapidly Omicron spreads. Management also raised their earnings forecast for fiscal 2022, projecting low-single digit growth, versus their previous projection of flat earnings.

However, investors grew concerned about the unavailability of staff on the company’s bottom line going ahead. Walgreens announced plans to spend around $120 million on employee wages, in a bid to compete with its peers amid labour shortages.

How shares responded: The company’s shares fell 2.9% to close at $52.44 on Thursday, following the release of quarterly results. The stock has added more than 10% over the past six months.

What to watch: Investors will keep an eye on rising labour costs, which could impact Walgreens’s overall results in the current quarter. Markets will also monitor the further spread of Omicron, with the US setting a global record of over 1 million daily cases earlier this week.

The markets today

US stocks will be in focus today ahead of the all-important NFP (nonfarm payrolls) data.

Context: US stocks closed mostly lower on Thursday, after recording a sharp sell-off in tech stocks in the prior session.

Details: Wall Street tumbled on Wednesday following the release of minutes from the recent Federal Reserve meeting, which showed policymakers considering earlier rate hikes.

Technology stocks continued to decline, with investors moving out of high valuation names. Shares of Tesla and Netflix fell more than 2% each on Thursday. The MAGA stocks (Microsoft, Apple, Google and Amazon) ended in the red.

Energy stocks supported the US equity market, ending the sessions with gains due to a rise of around 2% in crude oil prices.

On the labour market front, the US reported an increase in initial jobless claims to 207,000 for the week ending January 1. The figure was higher than the projections of 195,000. Investor sentiment was further hit by a decline in the ISM services PMI to 62 in December, from a record high of 69.1 in the previous month.

The Dow Jones index shed more than 170 points to close at 36,236.47 on Thursday. The S&P 500 fell 0.1% to reach 4,696.05, while the Nasdaq 100 lost 0.04% to settle at 15,765.36. The tech-laden Nasdaq has tumbled around 4% over the past two sessions.

What to watch: Traders await jobs data from the US today. The US economy, which added just 210,000 jobs in November, is expected to record 400,000 job adds for December. Analysts expect the unemployment rate to ease to 4.1% in December, from 4.2% in the previous month.

Other Markets: European trading indices closed lower on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 down by 0.88%, 1.35%, 1.72% and 1.25%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Germany’s balance of trade, industrial production and current account, UK’s Halifax house price index and construction PMI, France’s balance of trade, industrial production, household consumption, retail sales and current account, China’s foreign exchange reserves, Eurozone’s inflation rate, retail sales, economic sentiment indicator, industry confidence indicator, consumer confidence indicator, consumer confidence price trends, selling price expectations and services confidence indicator, India’s foreign exchange reserves, Spain’s industrial confidence indicator, Mexico’s consumer price index, auto exports and car production, Brazil’s car production and auto sales, Canada’s unemployment rate, employment change and Ivey Purchasing Managers Index, South Africa’s total vehicle sales, Turkey’s treasury cash balance, as well as US Baker Hughes crude oil rigs and consumer credit.

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