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Tuesday, February 14, 2023

The news shaping the markets today

Ukraine said the situation was “difficult” in a village close to Bakhmut. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell this morning.


Australia’s Westpac-Melbourne Institute Index of Consumer Sentiment declined 6.9% to 78.5 in February, exerting pressure on the AUD/USD forex pair.


Japan’s economy grew 0.6% on an annualised basis in the fourth quarter, following a 1.0% contraction in the third quarter, which sent the JPY/USD pair higher in forex trading this morning.


India’s total passenger vehicle sales jumped by 26.7% to 298,093 units in January, rebounding from a 14.8% decline in December, lending support to the INR/USD forex pair.


New Zealand’s food prices accelerated 10.3% year-over-year in January, after a 11.3% rise a month ago, sending the NZD/USD pair lower in forex trading this morning.

 

What’s happening: European equity markets started the week on a positive note.

What happened: Markets in Europe rose on Monday, ahead of inflation data from the US today.

Defence shares rose sharply following an important announcement from India.

Why it matters: Investors in European markets awaited the release of US inflation data, which will provide more insight into the Federal Reserve’s monetary policy ahead.

The STOXX aerospace and defence index jumped 1.9% after India announced plans to triple its defence exports. Indian Prime Minister Narendra Modi said the country is looking to increase its annual defence exports to $5 billion by 2024-25, from the current $1.5 billion.

Shares of Swedish defence equipment maker SAAB rose more than 7%, while Thales and Airbus also closed higher on Monday.

Meanwhile, the European Commission raised its 2023 economic forecasts for the Euro Area from 0.3% to 0.9%, amid a decline in gas prices and a strong labour market. Eurozone consumer inflation, which climbed to record highs of 10.6% last October, is expected to ease to 5.6% in 2023 and to 2.5% in 2024, compared to earlier expectations of 6.1% and 2.6%, respectively.

“This forecast crucially hinges on the purely technical assumption that Russia’s aggression of Ukraine will not escalate but will continue throughout the forecast horizon,” the EC said.

The STOXX Europe 600 Index gained 0.9% to close at 462.03 on Monday, with most sectors closing in positive territory. However, oil and gas stocks bucked the overall trend, falling 0.2% during the session.

The pan-European index had fallen around 1% on Friday after data released from UK showed Q4 gross domestic product had only narrowly avoided recession. European stocks recorded their first weekly decline in three weeks. However, the index has added 8.7% year-to-date, driven by upbeat earnings and a brighter forecast for the Eurozone.

Germany’s DAX 40 rose 0.58% to 15,397.34, while France CAC 40 climbed 1.11% to 7,208.59 on Monday.

What to watch: Investors also await the release of GDP and employment figures from the Eurozone today. The Euro Area economy is expected to grow by 1.9% year-over-year in the final three months of 2022, compared to 2.3% in the third quarter. The number of employed persons in the region, which increased by 0.3% to 213.8 million in the third quarter, is expected to surge by 0.5% in the fourth quarter.

The markets today

The British pound will be in focus today ahead of a basket of economic reports

Context: The GBP/USD forex pair settled higher on Monday, beginning a week of major economic data releases.

Details: Inflation data from the US will be released today, while UK’s inflation report is scheduled for Wednesday. UK’s inflation rate is expected to ease to 10.2% in January, from 10.5% in the prior month, after hitting 11.1% in October.

The deceleration in inflation triggered more speculations of the Bank of England slowing down its pace of interest rates hikes.

A decline in the US dollar also provided support to the British currency. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.3% to 103.35 on Monday.

The GBP/USD forex pair gained around 0.7% to 1.2141 on Monday, after moving lower earlier in the session.

London’s blue-chip FTSE 100 added 0.83% to close at a record 7,947.60, following gains in stocks of consumer staples and industrials. The domestically focussed FTSE 250 index gained 0.47% to reach 20,124.52.

What are expectations: Traders await the release of reports on UK’s unemployment rate, average weekly earnings and labour productivity today. The country’s unemployment rate is expected to increase to 3.8%, from 3.7% during the three months to November. Analysts expect average weekly earnings, including bonuses, to rise by 6.4% year-over-year in December. Labour productivity, which increased by 0.1% in the three months to September, is projected to decline by 0.3% in the fourth quarter.

Other Markets: US trading indices closed higher on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 1.11%, 1.14% and 1.60%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY  – 132.10 and 132.19 Negative
USD/CHF – 0.9181 and 0.9186 Negative
Nasdaq 100 – 12479.73 and 12512.32 Negative
S&P 500  – 4123.58 and 4132.84 Positive
Gold – 1866.30 and 1867.80 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0736, 0.08%) Dow ($34,231, -0.11%) Brent ($85.94, -0.8%)
GBP/USD (1.2145, 0.03%) S&P500 ($4,141, -0.15%) WTI ($79.21, -1.2%)
USD/JPY (132.10, -0.23%) Nasdaq ($12,514, -0.21%) Gold ($1,867, 0.2%)

What else to watch today

France’s unemployment rate, India’s wholesale price inflation rate and total passenger vehicles sales, Germany’s wholesale prices, US NFIB small business optimism index and Redbook index, Mexico’s central government budget value, as well as Argentina’s inflation rate.


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