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Wednesday, May 31, 2023

Today’s headlines

What’s happening: Shares of HP fell in after-hours trading on Tuesday, following the release of the company’s fiscal second-quarter results.

What happened: The PC maker reported better-than-expected earnings for the second quarter.

However, HP missed revenue expectations as high inflation impacted customer spending on personal computers.

How were the results: The California-based company reported a double-digit decline in sales for the quarter ending April 30.

  • Revenues fell 22% to $12.91 billion, missing the consensus estimates of $13.07 billion.
  • Adjusted earnings came in at 80 cents per share, topping Wall Street expectations of 76 cents per share.

Why it matters: Several PC makers, including HP, Lenovo and Dell, had recorded a sharp increase in sales of laptops during the pandemic, with people working and learning from home. Demand started to slow from those peak levels after the easing in covid-19 restrictions.

Global PC shipments fell 30% year-over-year to 55.2 million units in the first quarter of 2023, according to preliminary results from Gartner.

HP said sales for its Personal Systems unit declined 29% to $8.2 billion in the latest quarter, with sales at its printing division down 5% to $4.7 billion. CEO Enrique Lores cited the tough macro conditions as the reason for the lower performance, while adding that the second half of the year “will be stronger” than the first half.

Management lowered their projections for full-year adjusted profits to $3.30-$3.50 per share, from the prior forecast of $3.20-$3.60 per share.

The company also guided to adjusted earnings of 81-91 cents per share for the fiscal third quarter, versus market estimates of 85 cents per share.

What to watch: Amid growing AI trends, investors will monitor any refresh in HP’s personal computers, as the company is working with major software and silicon partners.

Markets will also watch inflation trends, which will be a major impact on the company’s overall results ahead.

The markets today

The Canadian dollar will be in focus today ahead of the country’s GDP report

Context: The CAD/USD forex pair edged lower on Tuesday, after the US reached a tentative debt ceiling agreement.

Details: President Joe Biden and House Speaker Kevin McCarthy reached a preliminary deal on debt ceiling over the weekend. The deal will now go to the House and Senate for approval.

The loonie had fallen to its weakest intraday level since April 28 on Friday, but edged higher on Monday.

However, the Canadian currency came under pressure again on Tuesday, following a sharp decline in prices for crude oil, one of the Canada’s major exports. WTI crude oil for July delivery fell $3.21 to settle at $69.46 per barrel on Tuesday.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, traded almost flat at 104.17 on Tuesday.

Markets are eagerly waiting for Canada’s GDP data, as this is expected to influence whether the Bank of Canada hikes its benchmark interest rate at its meeting next week. Speculations of a rate hike are low but growing.

The CAD/USD forex pair fell around 0.07% to 1.3601 on Tuesday.

What are expectations: Traders await GDP report from Canada today. The Canadian economy remained almost flat during the fourth quarter. Markets expect the country to report GDP growth of 2.1% for the first quarter.

Markets will also watch several major economic reports from the US today, which could impact the loonie.

Other Markets: European indices closed lower on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 1.38%, 0.27%, 1.29% and 0.92%, respectively.

The news shaping the markets

The US denied any involvement in the drone attack on Moscow. Continued geopolitical tensions sent the safe-haven US dollar index higher this morning.


Australia’s monthly Consumer Price Index indicator rose 6.8% in the year to April, higher than the 6.3% increase in the year to March, exerting pressure on the AUD/USD forex pair.


China’s official NBS manufacturing PMI fell to a five-month low of 48.8 in May, from 49.2 in the previous month. The recent reading missing market expectations of 49.4 sent the CNY/USD pair lower in forex trading this morning.


New Zealand’s ANZ Business Outlook Index improved to -31.1 in May, from -43.8 a month ago. However, the latest figure marked the 23rd consecutive month of negative readings and exerted pressure on the NZD/USD forex pair.


Japan’s retail sales rose by 5% year-over-year in April, versus 6.9% growth in March. The latest reading signalled expansion in retail trade for the 14th straight month and sent the JPY/USD pair slightly higher in forex trading this morning.

What else to watch today

Germany’s import prices, number of unemployed persons, unemployment change, unemployment rate and inflation rate, France’s inflation rate, GDP growth rate, household spending and producer prices, Turkey’s GDP growth rate, Italy’s gross domestic product and inflation rate, Spain’s current account, India’s central government budget value, money supply M3, GDP growth rate and infrastructure output, US MBA mortgage applications, Redbook index, Chicago business barometer, number of job openings, Dallas Fed general business activity index, Fed minutes and API crude oil stocks change, Brazil’s government budget value, gross debt to GDP, unemployment rate and net payrolls and Federal tax revenues, South Africa’s balance of trade, Canada’s GDP growth rate, Russia’s money supply M2, unemployment rate, retail sales, real wages, industrial production, business confidence, corporate profits and GDP, Mexico’s government budget value, as well as Australia’s CoreLogic home value index.


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