The news shaping the markets today

President Volodymyr Zelenskyy arrived in London on Wednesday, seeking more weapons to stave off Russia’s intensified assault. WTI crude oil declined slightly this morning.

Argentina’s industrial production declined by 2.7% year-on-year in December, following a 1% increase in the previous month. Despite this being the first month of expansion since January 2022, the ARS/USD forex pair remained almost flat after the news.

Britain’s RICS UK Residential Market Survey house price balance declined to -47 in January, from -42 in the prior month. This was the lowest reading since April 2009 and sent the GBP/USD lower in forex trading this morning.

Australia’s building permits rose by 18.5% to 16,556 units in December, in-line with expectations and coming in significantly better than the 8.8% decline in November. This was the first increase in building permits in four months and lent support to the AUD/USD forex pair.

Indonesia’s retail sales grew by 0.7% year-on-year in December, a slowdown from the 1.3% gain in the previous month. Although this was the softest growth since September 2019, it represented the 15th consecutive month of growth in retail sales and sent the IDR/USD pair slightly higher in forex trading this morning.

What’s happening: Shares of Walt Disney spiked in the after-hours session on Wednesday, after the company reported its quarterly results.

What happened: Although the entertainment conglomerate beat earnings expectations, it reported a decline in subscribers for its streaming service.

CEO Bob Iger announced job cuts to curtail costs and make the company more profitable.

How were the results: The Los Angeles, California-based company reported growth in both sales and earnings for the fiscal first quarter.

• Revenues grew to $23.51 billion, beating the consensus estimates of $23.37 billion.
• Adjusted earnings came in at 99 cents a share, exceeding Wall Street expectations of 78 cents per share.

Why it matters: Walt Disney’s theme parks make a significant contribution in the quarter. With theme park locations adding more than $6 billion in revenues, the parks, experiences and products divisions reported 21% growth in revenues to $8.7 billion.

The company’s pain point in the quarter was the direct-to-consumer division, which includes the Disney+ streaming service. Although the division reported 13% growth in revenues to $5.3 billion, it suffered an operating loss of more than $1 billion due to higher costs at Disney Plus and Hulu.

The company reported a total of 161.8 million global subscribers for its Disney+ streaming service. This was the first decline in subscribers since 2019 and represented a loss of around 2.4 million subs from the 164.2 million recorded in the previous quarter.

With Disney+ losing millions of subs and adding to costs, CEO Bob Iger announced plans to cut 7,000 jobs in a bid to lower costs by $5.5 billion and make Disney+ streaming business profitable. The announced layoffs accounts for around 3.6% of the company’s entire workforce.

“We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business,” Iger said in a statement before the company’s earnings call. He added that Disney+ is expected to “hit profitability by the end of fiscal 2024.”

How shares responded: Shares in Walt Disney jumped 5.40% to $117.82 in after-hours trading. The stock has added almost 26% year to date.

What to watch: Investors will monitor Walt Disney’s cost cutting initiatives and subscriber adds by the Disney+ segment. Markets will also keep an eye on any update on the reinstatement of the company’s dividend, with Disney having suspended it in 2020 due to the pandemic.

The markets today

European stocks will be in focus today after Wednesday’s strong moves

Context: European stocks climbed to nine-month highs on Wednesday, with some weakness in the US dollar and Powell’s speech.

Details: Almost all stock indices around the world rose on Wednesday and most currencies gained against the US dollar, with investors noting a more dovish tone in Federal Reserve Chairman Jerome Powell’s latest speech.

Although the US labour market exhibited strength with significantly higher-than-expected job additions in January and Powell reaffirmed the commitment of policymakers to bring inflation down to the 2% target, investors observed a more dovish tone in the Fed’s chief’s latest speech.

An easing of interest rate hikes by central banks lowers bond yields and increases the demand for equities. Moreover, a selloff in European bonds was triggered by the ECB saying it would cut the interest rate it pays to governments on their deposits.

After making strong advances against major currencies in early trading on Tuesday, the US dollar pared through the rest of the day and on Wednesday. The US dollar index, which measures the greenback’s performance versus a basket of currencies, declined by 0.05% to close at 103.35 on Wednesday.

Positive earnings reports from major European oil and gas companies further supported stocks in the region. Finnish refiner Neste’s stock added 10% and shares of Norwegian oil and gas giant Equinor climbed 7% on strong quarterly results.

The European Stoxx 600 index added 0.28% to close at 459.46 and the FTSE 100 gained 0.26% to reach 7,885.17, while the DAX 30 rose 0.60% to settle at 15,412.05 and the IBEX 35 added 0.60% to 9,227.30. However, the CAC 40 bucked the trend and lost -0.18% to close at 7,119.83.

What are expectations: Investors await earnings results from some major European companies, including L’Oréal, AstraZeneca, Unilever and Siemens, scheduled to be reported today. Markets also await GDP growth figures from the UK tomorrow. The British economy had expanded by 1.9% year-on-year in the third quarter of 2022 and is expected to grow by merely 0.4% in the fourth quarter.

Other Markets: Asian indices closed mostly higher on Wednesday, with Asia Dow, Hang Seng, Shanghai and Sensex up by 0.11%, 0.25%, 0.65% and 0.09%, respectively, and the Nikkei 225 down by 0.46%.

Support & resistances for today

Market snapshot

What else to watch today

South Africa’s mining production, gold production and state of the nation address, Turkey’s foreign exchange reserves, Brazil’s inflation rate and retail sales, Mexico’s inflation rate, Russia’s GDP, EU’s special European council meeting, US initial jobless claims and 30-year bond auction and EIA’s natural gas stocks change.

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