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Friday, February 24, 2023

The news shaping the markets today

The UN General Assembly approved a nonbinding resolution calling for Russia to withdraw its troops from Ukraine and end hostilities. The safe-haven US dollar index fell this morning.


UK’s GfK Consumer Confidence indicator rose to -38 in February, from -45 in the prior month, lending support to the GBP/USD forex pair.


Japan’s annual inflation rate accelerated to 4.3% in January, from 4.0% a month ago, sending the JPY/USD pair slightly higher in forex trading this morning.


Ireland’s KBC Bank consumer sentiment index rose to an eight-month high of 55.6 in February, from 55.2 a month ago, lending support to the EUR/USD forex pair.


Argentina’s economic activity estimator fell 1.2% year-over-year in December, following a 2.6% increase in the earlier month, sending the ARS/USD pair lower in forex trading this morning.

 

What’s happening: Shares of Alibaba Group declined on Thursday, after the company released results for its third quarter.

What happened: The ecommerce giant reported stronger-than-expected quarterly revenues.

However, Alibaba reported a slight decline in its core Chinese commerce business.

How were the results: The Chinese company reported sharp growth in profits for its fiscal third quarter to December 31.

  • Revenues grew 2% to 247.76 billion yuan, exceeding the consensus estimates of 245.18 billion yuan.
  • Net income attributable to ordinary shareholders jumped 69% year-over-year to 46.82 billion yuan, easily topping Wall Street expectations of 35 billion yuan.

Why it matters: Alibaba weathered weakness in China’s economy due to the country’s strict covid-19 policy spanning three years. China lifted restrictions only in December last year.

China’s total retail sales fell 1.8% in December, while the country’s economy expanded by merely 3% in 2022, representing one its worst growth rates in around half century.

Alibaba slashed jobs and rolled back its international operations to survive the challenging period. It reduced 7.5% of its workforce, or 19,576 employees, in 2022 as part of its cost-cutting measures.

The company’s core Chinese commerce business contracted by 1% during the quarter, representing the third consecutive decline for the unit. However, cloud computing revenues grew 3% to 20.2 billion yuan.

Local consumer services grew 6% year-over-year, while international commerce jumped 18%.

Ant’s profits tumbled 82.7% year-over-year to 3.05 billion yuan for the quarter ending September.

Alibaba joined the AI-powered search and chat space and announced that its ChatGPT-like tool is in the testing phase.

How shares responded: Alibaba’s shares fell 0.7% to close at $94.16 on Thursday, following the release of quarterly results. The stock has lost around 21% over the past month.

What to watch: Investors will keep an eye on developments around the company’s ChatGPT-styled tool and China’s reopening and economic growth.

The markets today

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

Context: The CAD/USD forex pair settled slightly higher in a volatile session on Thursday.

Details: The Canadian dollar edged higher versus the greenback on Thursday amid a rebound in oil prices. However, overall gains remained limited as economic reports continued to signal tightness in the US labour market.

US jobless claims surprisingly fell by 3,000 to 192,000 in the latest week, versus market projections of 200,000.

Payroll employment in Canada also increased by 91,400 in December, signalling a tight labour market. Average weekly earnings of non-farm payroll employees increased 3.4% year-over-year to $1,173.90 in December, recording growth for the 19th month.

On Wednesday, the CAD/USD forex pair tumbled to a seven-week low of 1.3568, amid growing speculations of the US Federal Reserve continuing to hike interest rates.

The price of crude oil, one of Canada’s major exports, gained on Thursday, after recording a sharp decline in the prior session. WTI crude oil for April delivery gained $1.44 to settle at $75.39 per barrel on Thursday.

The CAD/USD forex pair added around 0.1% to 1.3549 on Thursday. The S&P/TSX Composite index fell 0.03% to 20,188.19, extending losses for the fifth consecutive sessions.

What are expectations: Traders await the release of economic data on manufacturing sales, wholesale sales and government budget value from Canada today. Manufacturing sales in Canada, which contracted by 1.5% in December, is expected to decline 0.2% in January. Analysts expect wholesale sales to decline by 0.2% in January, following a 0.8% contraction in the prior month. Canada’s government is projected to post a budget surplus of C$0.6 billion in December, versus a deficit of C$3.4 billion in November.

Other Markets: US trading closed higher on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.33%, 0.53% and 0.94%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD  – 1.0592 and 1.0603 Negative
AUD/USD – 0.6811 and 0.6822 Positive
Silver – 21.282 and 21.350 Positive
Dow Jones  – 33127.93 and 33189.88 Positive
Nikkei 225 – 27389.16 and 27419.16 Negative

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0606, 0.09%) Dow ($33,165, -0.05%) Brent ($82.58, 0.8%)
GBP/USD (1.2031, 0.15%) S&P500 ($4,018, -0.03%) WTI ($76.04, 0.9%)
USD/JPY (134.64, -0.03%) Nasdaq ($12,188, -0.16%) Gold ($1,834, 0.4%)

What else to watch today

Germany’s GfK consumer climate indicator and gross domestic product, France’s consumer confidence, Spain’s producer price inflation, Turkey’s tourist arrivals, Brazil’s FGV consumer confidence index, consumer prices, foreign direct investment and current account, India’s value of deposits, foreign exchange reserves and value of loans, Mexico’s GDP growth rate, economic activity and current account, as well as US personal income, personal spending, core PCE annual rate, new home sales, University of Michigan consumer sentiment and Baker Hughes crude oil rigs.


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