The news shaping the markets today

Russian military forces are progressing towards two towns in Ukraine’s Zaporizhzhia region. The safe-haven US dollar index fell this morning.

US existing home sales fell 1.5% to an annual rate of 4.02 million in December, sending the Dow Jones index higher by more than 300 points on Friday.

Canada’s retail sales grew 0.5% in December, lending support to the CAD/USD forex pair.

Morocco’s annual inflation rate held at a record high of 8.3% in December, which sent the MAD/USD pair higher in forex trading this morning.

Macau’s tourist arrivals fell 52.6% year-over-year to 389,390 in December, versus a 54.3% decline in the prior month. The news exerted pressure on the MOP/USD forex pair.

What’s happening: Shares of Alphabet gained on Friday after the company announced job reduction plans.

What happened: Google’s parent Alphabet unveiled plans on Friday to slash around 12,000 jobs.

The job cuts at the Mountain View, California-based company affect 6% of its workforce and follows thousands of job cuts at various tech giants.

Why it matters: Alphabet recently reported downbeat earnings for its third quarter due to slowing ad sales growth.

The company said YouTube revenues had declined 2% to about $7.07 billion in the three months ended September, while ad sales grew just 2.5% to $54.48 billion during the period. Overall revenues rose by merely 6.1% to $69.1 billion, representing the slowest pace since 2013.

Alphabet had gone on a hiring spree during the covid-19 pandemic, following a surge in the digital advertising sector. The number of employees rose from 118,899 at the end of 2019 to 156,500 by the end of 2021. The company continued to hire in 2022, with 186,799 employees on its payrolls in September.

However, Google joined its big tech peers, including Amazon, Microsoft and Meta Platforms, to announce its downsizing decision amid surging inflation and a higher interest rate environment.

On Friday, Google CEO Sundar Pichai sent an email to staff members to inform them about the layoffs. Pichai said he takes “full responsibility for the decisions” as the company now faces a “different economic reality.”

“I am confident about the huge opportunity in front of us thanks to the strength of our mission, the value of our products and services, and our early investments in AI. These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities,” the CEO added.

Earlier this week, Microsoft announced plans to cut around 5% of its workforce and take a charge worth $1.2 billion against its Q2 earnings. The announcement will result in around 10,000 job cuts, although the company said it will continue investing in artificial intelligence.

Late last year, Amazon had also slashed its global workforce by about 18,000 employees, while Meta Platforms had announced plans to cut around 11,000 jobs.

How shares responded: Alphabet’s shares gained 5.3% to close at $98.02 on Friday and added 0.1% in the after-hours session. The stock has lost around 14% over the past six months.

What to watch: Investors have generally reacted positively to layoff announcements by tech giants and expect reductions in labour costs to boost earnings ahead. Markets will keep an eye on Alphabet’s investments to grow other business divisions as well as other major companies that announce job cut decisions to improve their future profitability.

The markets today

European stocks will be in focus ahead of consumer confidence indicator data

Context: European markets closed higher on Friday, recovering from Thursday’s selloff.

Details: European stocks settled lower on Thursday, after global markets became cautious following weak retail sales data from the US reignited fears of a global economic slowdown.

Investors have been concerned about the US Federal Reserve continuing to increase rates to curb inflation, despites signs of an economic slowdown. Both the Dow Jones and S&P 500 indices recorded losses for a third straight session on Thursday.

The overall market sentiment improved on Friday due to optimism around the reopening in China ahead of the Lunar New Year holidays and a decline in inflation levels.

Friday marked the end of the World Economic Forum in Switzerland, where policymakers and CEOs discussed key issues related to the economy and climate changes.

The STOXX Europe 600 index gained 0.37% to settle at 452.12 on Friday, as travel and leisure stocks recorded strong gains and most sectors closing in the positive zone. However, the pan-European index settled slightly lower for the week.

British retail sales contracted by 1% in December, following a 0.5% decline in the previous month. The figure missed the consensus estimates of 0.5% growth. The GfK Consumer Confidence indicator in the UK also declined to -45 in January, from -42 a month ago.

Despite this, London’s FTSE 100 gained 0.30% to close at 7,770.59 on Friday, driven by surge in technology shares. The index lost around 1% in the week.

The DAX 40 added 0.76% to 15,033.56, while the CAC 40 gained 0.63% to 6,995.99.

What are expectations: Investors await data on consumer confidence indicator from the Eurozone today. The consumer confidence indicator in the Eurozone, which increased for a third month to -22.2 in December, is expected to improve further to -17 in January.

Other Markets: US trading indices closed higher on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 1.00%, 1.89% and 2.86%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Turkey’s consumer confidence indicator, Brazil’s federal tax revenue and central bank of Brazil’s focus market readout, Canada’s new home prices, as well as US CB leading index.