The news shaping the markets today

The People’s Bank of China lowered its key lending rates for corporate and household loans at its recent meeting. Despite this, the CNY/USD forex pair remained elevated.

Australia’s unemployment rate eased to 4.2% in December, from 4.6% in the previous month. This being the lowest jobless reading since August 2008 sent the AUD/USD pair higher in forex trading this morning.

Japan reported a trade deficit of ¥582.36 billion in December, versus a year-ago surplus of ¥780.28 billion, which exerted pressure on the JPY/USD forex pair.

New Zealand’s food prices rose 4.5% year-over-year in December, hitting a new 10-year high, which sent the NZD/USD pair lower in forex trading this morning.

South Korea’s producer prices surged 9.0% year-over-year in December, following the 13-year high of 9.8% recorded in the earlier month. The news exerted pressure on the KRW/USD forex pair.

What’s happening: Shares of Bank of America edged higher on Wednesday after the bank reported upbeat earnings for its fourth quarter.

What happened: Growth in loans and a sharp increase in M&A volumes helped Bank of America deliver better-than-expected earnings for the latest quarter.

However, the Charlotte, North Carolina-based company failed to beat revenue estimates.

How were the results: Bank of America reported double-digit growth in both sales and earnings results for the fourth quarter.

• Quarterly revenues came in at $22.1 billion, up 10% year-over-year but slightly short of the market expectations of $22.2 billion.
• Net income jumped 28% to $7 billion, or 82 cents per share, surpassing the Street estimates of 75 cents per share.

Why it matters: Several major banks recorded higher expenses from bonuses and other wages in the fourth quarter. However, Bank of America said projected its 2022 expenses to be flat.

Average loans and leases grew 3.4% from the prior quarter and 3.2% on the year, following strong growth in commercial loans. However, one of the company’s major peers, JPMorgan Chase reported a 6% increase in average loans. On the other hand, Wells Fargo suffered a 3% decline.

Bank of America’s net interest income climbed around 11% to $11.41 billion, driven by strong growth in loans and deposits. The bank released reserves worth $851 million in the fourth quarter, amid further easing of default risks.

The bank’s revenues from fixed-income, currencies and commodities trading fell 9.9% to $1.57 billion, with revenues from equity trading growing 3.3% to $1.36 billion.

Several big corporates and buyout funds struck deals worth billions of dollars last quarter, helping Bank of America record healthy fees. Investment banking fees grew 26% to $2.4 billion, while advisory fees jumped 55% year-over-year to $850 million.

A rebound in spending on credit and debit cards also provided support to quarterly profits. Combined spending on credit and debit cards grew 22% to $212 billion.

How shares responded: Shares of Bank of America gained 0.4% to close at $46.44 on Wednesday following the release of quarterly results. The stock has gained 45% over the past 12 months, versus a 33% rise in the KBW Bank Index.

What to watch: Investors will keep an eye on the spread of Omicron, which could impact the bank’s results ahead.

The markets today

Crude oil will be in focus today ahead of the EIA’s (Energy Information Administration) data on crude stockpiles.

Context: Crude oil settled higher on Wednesday, recording gains for a fourth straight session.

Details: Crude oil prices surged to their strongest level since October 2014, after oil supply was briefly hit by an explosion caused by a power pylon falling on the pipeline running from Iraq to Turkey. However, flows resumed after Turkey reopened the Kirkuk-Ceyhan pipeline.

Output shortfalls in OPEC+ (Organization of the Petroleum Exporting Countries and its allies) member nations also added to supply concerns on Wednesday. Yemen’s Houthi group attacked the OPEC’s third-biggest producer, UAE, raising further concerns over a supply shortage.

Adding to the geopolitical concerns were rising tensions between Russia and Ukraine. Russia amassed over 100,000 troops near Ukraine’s border, triggering invasion fears.

Sentiment in the oil market was also supported by a report from Goldman Sachs in which analysts said they expected Brent to surge above $100 per barrel this year despite the spread of the Omicron variant.

US WTI crude futures added $1.53 to close at $86.96 per barrel on Wednesday, reaching their highest since October 9, 2014. Brent crude futures gained 93 cents to settle at $88.44 per barrel, after hitting its highest level since October 13, 2014 during the session.

Wholesale gasoline for February delivery added 3 cents to $2.46 a gallon, while February natural gas declined 25 cents to $4.03 per 1,000 cubic feet.

What to watch: Traders await data on crude oil stockpiles from the EIA today. US crude oil inventories had contracted by 4.553 million barrels in the week ending January 7 and are expected to decline by 0.938 million barrels in the latest week.

Rising covid-19 cases remains a major concern for markets, with total global infections surging past 339 million.

Other Markets: European indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 0.35%, 0.24%, 0.55% and 0.23%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Germany’s producer price inflation, Indonesia’s value of loans and Bank of Indonesia’s interest rate decision, France’s manufacturing climate indicator and business climate indicator, Italy’s construction output, Spain’s balance of trade, Eurozone’s inflation rate and European Central Bank’s monetary policy meeting accounts, South Africa’s value of recorded building plans passed, Turkey’s foreign exchange reserves, government debt and Central Bank of Turkey’s interest rate decision, Mexico’s unemployment rate, Canada’s ADP employment change, US initial jobless claims, Philadelphia Fed manufacturing index, existing home sales and natural gas stocks change, Australia’s new home sales as well as Argentina’s balance of trade.