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Trends & Analysis
News

TJX announces strong sales, dividend hike

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Trends & Analysis
News

TJX announces strong sales, dividend hike

News

Who wins the S&P 500’s bank battle?

News

USD/JPY edges lower on economic data

News

Li Auto shares race ahead on upbeat earnings

News

Can anything stop NVIDIA?

News

Gold rises on soft dollar, geopolitical concerns

News

Meta Platforms plans more layoffs

 

Wednesday, March 08, 2023

The news shaping the markets today

Ukraine’s Deputy Prime Minister said that less than 4,000 civilians remained in the city of Bakhmut. Amid continued geopolitical tensions, the safe-haven US dollar index rose this morning.


Japan posted a current account deficit of ¥1,976.6 billion in January, versus a surplus of ¥33.4 billion in the previous month, exerting pressure on the JPY/USD forex pair.


The American Petroleum Institute said US crude stockpiles had declined by 3.835 million barrels in the week ended March 3, versus an increase of 6.203 million barrels in the prior week. The news sent WTI crude oil prices slightly higher this morning.


Indonesia’s consumer confidence fell to 122.4 in February, from a five-month high of 123.0 in January, exerting pressure on the IDR/USD forex pair.


US wholesale inventories contracted by 0.4% to $929 billion in January, sending the Dow Jones index lower by around 575 points on Tuesday.

 

What’s happening: Shares of Meta Platforms fell slightly on Tuesday, after news of the company’s plans for further jobs cuts.

What happened: The company intends to cut thousands of jobs, which could be announced as early as this week, a Bloomberg report said on Tuesday.

Meta Platforms also plans to shift its focus away from Metaverse and invest more in AI language models.

Why it matters: The world’s largest social networking company had laid off 11,000 employees, or approximately 13% of its overall workforce, just a few months ago. This was among the biggest cuts announced last year and the first major layoff in the company’s history.

Meta Platforms has been struggling to cut costs, after reporting a massive decline in earnings for the final quarter of 2022. The Bloomberg report said that the latest round of job reductions is separate from the “flattening” that is ongoing at the company and is driven by financial targets.

Several other big tech firms, including Alphabet and Microsoft, have also announced jobs cuts.

Meta Platforms had been investing heavily in the development of Metaverse, while ad revenues at Facebook and Instagram continued to decline, mainly due to recession concerns and interest rate hikes by central banks.

After the success of OpenAI’s ChatGPT, in which Microsoft has invested $10 billion, Google and Baidu announced their AI-based chatbot. Meta Platforms is investing in its new AI language generator, named LLaMA.

How shares responded: Shares of Meta Platforms fell 0.2% to close at $184.51 on Tuesday. The stock has added around 14% over the past six months and has almost doubled since early November when the first round of layoffs was announced.

What to watch: Investors will keep an eye on the company’s execution of layoffs. Markets will also monitor other cost cutting plans at the company.

The markets today

The Canadian dollar will be in focus today ahead of Bank of Canada’s interest rate decision

Context: The CAD/USD forex pair fell sharply on Tuesday following comments from Federal Reserve Chairman Jerome Powell.

Details: During his testimony before the Senate Banking Committee, Powell said that the latest economic reports may encourage the Federal Reserve to raise interest rates at a more aggressive pace. He added that the final interest rate could be higher than was earlier projected.

The US dollar rose sharply following Powell’s comments. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gaining around 1.2% to 105.62 on Tuesday.

The price of crude oil, one of Canada’s major exports, fell sharply and exerted more pressure on the CAD/USD forex pair. WTI crude oil futures tumbled around 3.4% to settle at $77.58 per barrel on Tuesday.

Traders await Bank of Canada’s policy decision, which is likely to keep interest rates unchanged due to the latest economic reports. Canada’s GDP surprisingly stalled in the fourth quarter of 2022, although preliminary figures signal a rebound in January. The annual inflation rate in the country eased to 5.9% in January, reaching the lowest level in almost a year.

The CAD/USD forex pair fell around 1% to 1.3755 on Tuesday. The S&P/TSX Composite Index lost 1.17% to settle at 20,275.54.

What are expectations: Traders await Bank of Canada’s interest rate decision today. The central bank is expected to keep its overnight rate unchanged, after raising the target by 25bps to 4.5% at its first meeting of the year. Traders widely expect policymakers to resume policy tightening later during the year.

The release of data on balance of trade will also remain in focus. Canada, which reported a trade deficit of C$0.16 billion in December, is expected to post a surplus of C$0.1 billion in January.

Other Markets: European indices closed lower on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.13%, 0.60%, 0.46% and 0.77%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD  – 1.0532 and 1.0538 Positive
USD/CHF – 0.9428 and 0.9438 Positive
Nasdaq 100 – 12136.95 and 12170.47 Negative
Nikkei 225  – 28354.50 and 28394.50 Positive
Copper  – 3.9772 and 3.9837 Negative

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0535, -0.13%) Dow ($32,865, 0.01%) Brent ($83.51, 0.3%)
GBP/USD (1.1814, -0.09%) S&P500 ($3,987, -0.06%) WTI ($77.61, 0.1%)
USD/JPY (137.74, 0.43%) Nasdaq ($12,150, -0.15%) Gold ($1,813, -0.4%)

What else to watch today

Germany’s industrial production and retail sales, Italy’s retail sales, Eurozone’s employment change and growth rate, India’s money supply M3, US MBA mortgage applications, ADP employment change, balance of trade, number of job openings, Fed Chair Powell testimony, Fed Beige Book, crude oil stocks change, gasoline stocks, and distillate stocks, Spain’s consumer confidence, as well as Argentina’s industrial production.


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