The news shaping the markets today

The RUB/USD forex pair dropped around 40% this morning, hitting a record low, after Western nations imposed new sanctions against Russia due to its invasion of Ukraine.

Singapore’s bank loans rose to a record S$818 billion in January, from S$816.8 billion in the previous month, sending the SGD/USD pair lower in forex trading this morning.

Japan’s retail sales grew 1.6% in January, recording gains for the fourth consecutive month, which lent support to the JPY/USD forex pair.

Australia’s retail sales rose by 1.8% in January, following a 4.4% decline in the previous month. Despite the figure beating market estimates of 0.2% growth, the AUD/USD forex pair remained under pressure.

New Zealand’s ANZ Business Outlook Index fell to -51.8 in January, from -23.2 a month ago. The country recording the weakest figure since April 2020 sent the NZD/USD pair lower in forex trading this morning.

What’s happening: Shares of Foot Locker tumbled on Friday, despite the company reporting stronger-than-expected results for its fourth quarter.

What happened: Foot Locker’s shares dipped to their weakest in around a year and a half, with the continued shrinking of business from its largest supplier.

One of the major analysts also downgraded the rating for the company following the release of its earnings report.

How were the results: The shoe-store company reported a decline in net income for its fiscal fourth quarter, but its adjusted earnings still came in above market views.

• Sales grew 6.9% year-over-year to $2.34 billion, marginally beating the consensus estimate of $2.33 billion.
• Net income fell to $103 million, or $1.02 per share, from $123 million, or $1.17 per share, in the year-ago quarter.
• Adjusted earnings came in at $1.67 per share, beating Street expectations of $1.44 per share.

Why it matters: Foot Locker had identified Nike as its biggest supplier in its latest annual filing. However, the company’s business with Nike has continued to shrink, with Nike investing in its direct-to-consumer (DTC) business to reduce its dependence on third parties.

Foot Locker’s comparable store sales rose 0.8% last quarter, with apparel outpacing footwear. The company’s gross margins contracted by 10 basis points to 33%, while SGA (selling, general and administrative) expenses grew 14.1% year-over-year to $525 million amid higher labour and marketing costs.

Foot Locker declared a quarterly dividend of 40 cents per share, which represents a 33% hike. The company’s board also announced a new share repurchase program of up to $1.2 billion in common stock.

Management issued soft outlook for fiscal 2022, projecting a decline in sales of 4% to 6% year-over-year and in comparable store sales of 8% to 10%. The company guide to earnings between $4.25 and $4.60 per share, significantly short of market views of $6.49 per share.

Evercore ISI analysts downgraded Foot Locker’s stock from Outperform to In-Line following the release of earnings. “We prefer to stay on the sidelines until we get better clarity on the what will be the sustainable level and quality of Nike’s product allocations to Foot Locker,” said Evercore ISI’s note to clients.

How shares responded: Foot Locker’s shares tumbled 29.8% to close at $29.07 on Friday. The stock has lost around 35% over the past month.

What to watch: Investors will continue monitoring Foot Locker’s new vendor mix strategy and Nike’s investments in its DTC business.

The markets today

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

Context: The CAD/USD forex pair gained on Friday, following the release of Canada’s wholesale trade data.

Details: The safe-haven US dollar fell on Friday, while global equities moved higher, after Western nations imposed sanctions on Russia. The US dollar index, which measures the greenback’s performance versus a basket of major currencies, declined by more than 0.4% to 96.62.

The price of crude oil, one of Canada’s major exports, pared some gains after hitting a seven-year high. US crude oil futures settled lower at $91.59 per barrel on Friday.

Traders also assessed the Russia-Ukraine situation. The geopolitical tensions are unlikely to stop the Bank of Canada from hiking rates at its next meeting, scheduled for later this week. Experts expect the central bank to increase its policy rate by 25 basis points at the meeting.

Canada’s wholesale trade climbed 3.9% in January, representing the steepest growth since July 2020, according to a flash estimate from Statistics Canada. Canada’s government also reported a budget surplus of C$3.58 billion in December, versus a deficit of C$16.15 billion in the same month a year earlier. Investor sentiment was also supported by an improvement in Canada’s CFIB’s business barometer long-term index of 8 points to a reading of 62.5 in February.

The CAD/USD forex pair climbed sharply to settle at 1.2708 on Friday, after tumbling to its lowest intraday level in over two months on Thursday.

What to watch: Traders await the release of economic data on current account, producer price inflation and raw materials price index from Canada today. Canada is expected to post a current account surplus of C$0.9 billion in the fourth quarter, down from C$1.4 billion in the third quarter. The industrial product price, which rose 0.7% in December, is expected to rise 0.6% in January.

Markets will also continue monitoring the Russia-Ukraine crisis.

Other Markets: US indices closed higher on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 2.51%, 2.24% and 1.53%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

South Africa’s money supply M3, private sector credit and balance of trade, Turkey’s GDP growth rate and balance of trade, Spain’s inflation rate and current account, India’s infrastructure output, GDP growth rate and central government budget value, Central Bank of Brazil’s focus market readout, Mexico’s unemployment rate, Russia’s money supply M2, US wholesale inventories, goods trade balance, Chicago PMI and Dallas Fed manufacturing index, Saudi Arabia’s money supply M3 and bank lending growth as well as Brazil’s net payrolls.