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Monday, January 30, 2023

The news shaping the markets today

NATO Secretary General Jens Stoltenberg urged South Korea to step up military support to Ukraine. The US dollar index, which measures the greenback’s performance versus a basket of major currencies, rose this morning.


New Zealand posted a trade deficit of NZ$475 million in December, compared to a year-ago gap of NZ$990.3 million, exerting some pressure on the NZD/USD forex pair.


Vietnam’s retail sales jumped by 20.0% year-over-year in January, accelerating from the 17.1% growth recorded a month ago, which sent the VND/USD pair higher in forex trading this morning.


Canada’s government budget deficit widened to C$3.4 billion in November, versus a gap of C$1.4 billion in the year-ago period, exerting pressure on the CAD/USD forex pair.


Colombia’s central bank hiked its benchmark interest rate by 75bps to 12.75% at its January meeting, below market estimates of a 100bps increase, which sent the COP/USD pair lower in forex trading this morning.

 

What’s happening: Shares of American Express surged on Friday, after the company released results for its fourth quarter.

What happened: The card company reported weaker-than-expected results for its latest quarter on Friday.

However, AmEx issued a strong forecast for one of its key metrics and also announced a dividend hike, lending upside to the stock.

How were the results: The New York-based company reported growth in sales for the three months ended December 31, but the figure still missed market views.

  • Revenues, net of interest expenses, climbed 17% year-over-year to $14.18 billion, but missed the consensus estimates of $14.22 billion.
  • Earnings came in at $2.07 per share, missing Wall Street expectations of $2.22 per share.

Why it matters: Surging inflation has been exerting pressure on US household budgets. However, having a more affluent customer base resulted in AmEx feeling less pain than its peers. Although the US economy shrank during the first two quarters of 2022, AmEx was still able to increase revenues by 25% in the year.

The company reported quarterly results shortly after its major peers Visa and Mastercard warned of a slowdown in growth this year.

AmEx’s total network volumes grew 12% year-over-year to $413.3 billion. US consumer services revenues rose 23% year-over-year to $6.5 billion, while international card services revenues rose 14% to $2.4 billion.

American Express announced plans to increase the regular quarterly dividend by 15% to 60 cents per share.

However, the credit card company set aside more funds due to a gloomier economic forecast. Its provisions for credit losses were $1.03 billion in the recent quarter, up sharply from $53 million in the year-ago period.

Management guided to revenue growth of 15%-17% and earnings of $11.00-$11.40 per share for fiscal 2023, higher than expectations of $10.52 per share.

How shares responded: Shares of American Express jumped 10.5% to close at $172.31 on Friday, following the release of quarterly results. The stock has gained around 12% over the past six months.

What to watch: Investors will focus on the Federal Reserve’s interest rate decision, which could significantly impact the company’s overall results in the current quarter. Markets will also continue monitoring the covid-19 situation in China.

The markets today

Gold will be in focus today after closing slightly lower on Friday

Context: Gold futures edged lower on Friday but recorded gains for the sixth straight week.

Details: Traders assessed economic data released on Friday, which showed US PCE inflation coming in-line with market estimates.

The PCE price index rose by 0.1% in December, while the annual rise in prices eased to 5%. Core PCE prices, the Fed’s preferred gauge of inflation, slowed to 4.4% during the last 12 months, representing the lowest increase in 14 months.

The University of Michigan consumer sentiment improved to 64.9 in January, notching the strongest reading since April, compared to a flash reading of 64.6.

Amid rising investor risk appetite, gold prices for February declined by 60 cents, less than 0.1%, to close at $1,929.40 an ounce on the Comex on Friday. Despite the decline, the yellow metal ended the week with gains of around 0.1%. The safe-haven metal had climbed to a nine-month high earlier last week, which also was the sixth consecutive week of gains, the longest streak since August 2020.

Silver prices for March declined by 40 cents, or 1.7%, to settle at $23.622 per ounce, falling around 1.3% for the week. Copper for March declined around 1.1% to $4.2225 a pound, recording a 0.7% weekly loss. March palladium declined about 3.9% to $1,599.70 per ounce, while platinum for April fell 0.6% to $1,016.80 an ounce.

What are expectations: Traders will keep an eye on the Fed’s interest rate decision, due on February 1. Any weakness in the US dollar could bode well for gold.

Other Markets: European indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 0.05%, 0.11%, 0.02% and 0.26%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY  – 130.03 and 130.12 Negative
GBP/USD – 1.2388 and 1.2395 Negative
Gold – 1919.61 and 1937.66 Positive
Platinum – 1020.84 and 1023.39 Negative
S&P 500 – 4083.26 and 4094.47 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0870, 0.01%) Dow ($33,966, -0.23%) Brent ($86.32, -0.1%)
GBP/USD (1.2393, -0.02%) S&P500 ($4,072, -0.30%) WTI ($79.62, -0.1%)
USD/JPY (130.13, 0.21%) Nasdaq ($12,173, -0.40%) Gold ($1,925, -0.2%)

What else to watch today

Turkey’s economic confidence index, Spain’s consumer price inflation, retail sales and industry confidence indicator, Germany’s GDP growth rate, Eurozone’s economic sentiment indicator, industry confidence indicator, selling price expectations, services confidence indicator, consumer confidence indicator and consumer inflation expectations index, Italy’s producer prices, Brazil’s IGP-M inflation, net payrolls, government budget value and Central Bank of Brazil’s focus market readout, US Dallas Fed manufacturing index, as well as Saudi Arabia’s bank lending growth and money supply M3.


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