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Nike beats Q3 views, shares run higher

The news shaping the markets today

Ukraine’s Defence Ministry officials said the country’s army had managed to force Russian troops out of the strategically significant Kyiv suburb, known as Makariv. This prevents Russian forces from encircling the capital city of Kyiv from the northwest. The news sent gold prices higher this morning.


Japan lifted all covid-19-related restrictions, sending the Nikkei 225 to its highest level in a month this morning.


New Zealand’s consumer confidence indicator fell to 92.1 in the first quarter, from 99.1 in the prior period, exerting pressure on the NZD/USD forex pair.


Nigeria’s central bank held its benchmark interest rate at a six-year low of 11.5% in March, sending the NGN/USD pair lower in forex trading this morning.


Oman’s annual inflation rate decelerated to 4.02% in February, from 4.35% in the previous month, which was the highest since November 2011. However, the OMR/USD forex pair remained under pressure.

 

What’s happening: Shares of Nike rose in after-hours trading on Monday, after the company reported upbeat results for its fiscal third quarter.

What happened: The world’s biggest sportswear maker reported strong quarterly sales with all Nike factories in Vietnam now back on track.

However, the company reported a decline in sales in one of its key regions.

How were the results: The Beaverton, Oregon-based company reported revenue growth for the quarter ending February 28, with both top- and bottom-line metrics surpassing market views.

  • Revenue grew 5% to $10.87 billion, beating the consensus estimates of $10.59 billion.
  • Net income came in at $1.4 billion, down 4% from the year-ago quarter.
  • Adjusted earnings stood at 87 cents per share, ahead of Street expectations of 71 per share.

Why it matters: Nike was forced to close its factories in Vietnam last year, these account for around half of its footwear production. The closure of these factories and a slower return to normal production levels had resulted in a shortage of Nike products across most of its markets.

The company said during its latest earnings call that all its Vietnamese factories are now operational, and that total footwear and apparel production has mostly returned to the pre-closure levels.

Nike is still seeing some delays in shipments, mostly in North America. The company reported a 9% surge in its revenues in North America, driven by price hikes and the return of sports in schools. However, revenues in Greater China fell 8%, with the company being forced to prioritise its North American market.

The company’s direct sales grew 15% year-over-year to $4.6 billion, while Nike brand digital sales jumped 19%.

“Nike’s strong results this quarter show that our Consumer Direct Acceleration strategy is working, as we invest to achieve our growth opportunities,” Nike CEO John Donahoe said.

How shares responded: Nike’s shares climbed 5.3% to $137.09 in after-hours trading following the release of quarterly results on Monday. The stock has lost around 21% year to date.

What to watch: Investors will continue monitoring the shipping-related issues. Markets will also keep an eye on the covid-19 cases in China and Europe.

The markets today

Crude oil will be in focus today ahead of the API’s (American Petroleum Institute) data on stockpiles

 

Context: Crude oil prices moved higher on Monday, with EU nations considering a ban on Russian oil and gas.

Details: European government officials are scheduled to meet and US President Joe Biden this week to strengthen their response to Russia’s invasion of Ukraine. The European governments are under pressure to ban oil and gas imports from Russia.

The EU has already announced various measures against Russia. However, Germany said the common bloc is too dependent on Russian imports to consider an oil and gas ban. Russia accounts for around 45% of EU’s gas imports and 40% of the bloc’s gas consumption.

Investors grew more concerned after Yemen’s Iran-aligned Houthi group attacked a Saudi energy terminal over the weekend.

WTI crude oil for April delivery gained $7.42 to settle at $112.12 per barrel on Monday, after adding 1.7% on Friday. Brent crude for May delivery climbed $7.69 to close at $115.62 per barrel, following a 1.2% increase in the previous session.

In other energy trading, wholesale gasoline for April delivery gained 13 cents to reach $3.37 a gallon, while April natural gas added 4 cents to settle at $4.90 per 1,000 cubic feet on Monday.

What to watch: The ongoing conflict between Russia and Ukraine will remain a major concern for traders. Markets will also focus on this week’s meeting between the EU governments and the US President. Meanwhile, traders await the API’s data on crude oil stockpiles in the US, which had grown by 3.75 million barrels in the week ending March 11.

Other Markets: European trading indices closed mixed on Monday, with the FTSE 100 and STOXX Europe 600 up by 0.51% and 0.04%, and the DAX 40 and CAC 40 down by 0.60% and 0.57%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD – 1.0990 and 1.0997 Positive
USD/JPY – 119.85 and 119.92 Negative
WTI Crude Oil – 112.58 and 112.96 Positive
Natural Gas – 4.944 and 4.955 Negative
Nasdaq 100 – 14306.44 and 14412.11 Negative

 

Market snapshot

What else to watch today

South Africa’s leading business cycle indicator and SACCI business confidence index, UK’s public sector net borrowing and CBI industrial trends orders, Eurozone’s current account and construction output, Italy’s current account, Brazil’s Federal tax revenues and Central Bank of Brazil’s Copom meeting minutes, Mexico’s consumer spending and GDP aggregate demand, Canada’s raw materials prices, industrial product price and wholesale sales, US Redbook index, Richmond Fed manufacturing index and Richmond Fed services index, as well as Argentina’s current account.


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