The news shaping the markets today

Ukraine’s President Volodymyr Zelensky is reportedly looking to visit Washington, his first foreign trip since Russia invaded the country in February. Continued geopolitical tensions sent the US dollar index slightly higher this morning.

Australia’s Westpac-Melbourne Institute Leading Economic Index declined 0.1% to 97.64 in November, from 97.77 in October. However, the AUD/USD pair rose slightly in forex trading this morning.

New Zealand reported a trade deficit of NZ$1.86 billion in November, up from NZ$1.08 billion in the year-ago month, which exerted pressure on the NZD/USD forex pair.

Argentina recorded a current account deficit of $3,031 million in the third quarter, the widest gap since the first quarter of 2019, which sent the ARS/USD pair lower in forex trading this morning.

Eurozone’s consumer confidence indicator improved by 1.7 points to -22.2 in December, after a record low of -28.7 in September. Despite this, the EUR/USD pair remained under pressure.

What’s happening: Shares of Nike surged in after-hours trading on Tuesday, after the company released results for its fiscal second quarter.

What happened: The athletic giant reported higher-than-expected sales for its second quarter on Tuesday.

However, Nike reported a decline in sales at one of its major markets in the quarter.

How were the results: The Beaverton, Oregon-based company reported double-digit growth in sales for its fiscal second quarter, which also topped market views.

• Revenues climbed 17% year-over-year to $13.31 billion, beating the consensus estimates of $12.57 billion.
• Earnings grew by 2% to 85 cents per share, surpassing Street expectations of 65 cents per share.

Why it matters: Nike reported strong demand for its shoes in North America and Europe, which helped offset a decline in sales in one of its key regions, China.

Nike’s sales surged 30% in its largest market, North America, and grew 11% in Europe and the Middle East. However, the company’s China sales fell 3% due to covid-19 related restrictions in the country.

Nike Direct sales grew 16% to $5.4 billion, while Nike brand digital sales climbed 25% year-over-year and wholesale revenues jumped 19%.

Like other retailers, Nike has been impacted by rising inflation and a change in preferences among customers, which resulted in a significant increase in inventory. Inventories grew 43% year-over-year to $9.3 billion.

Nike’s margins narrowed due to higher markdowns, rising costs and strength in the US dollar. The company’s gross margins contracted by 300 basis points to 42.9%, with net income coming in flat versus last year.

How shares responded: Nike’s shares jumped 12.8% to $116.39 in the after-hours trading session, following the release of quarterly results on Tuesday. The stock has lost around 5% over the past six months.

What to watch: Investors will keep an eye on the covid-19 situation in China, as further relaxing of restrictions could boost Nike’s overall sales in the current quarter.

The markets today

Gold will be in focus today after recording gains on Tuesday

Context: Gold prices climbed to a six-month high on Tuesday, following a decline in the US dollar.

Details: Prices of various precious metals surged on Tuesday, after the Bank of Japan raised the upper limit for its 10-year bond yields, which exerted pressure on the US dollar.

Japan’s central bank said the yield on the 10-year government bond could be raised as high as 0.5%, compared to its earlier cap of 0.25%, which sent the Japanese yen sharply higher on Tuesday. The JPY/USD pair jumped around 4% during the session following the bank’s announcement.

The US dollar index, which measures the greenback’s performance versus a basket of major currencies, fell around 0.7% to 103.97 on Tuesday.

Gold prices also received support from mixed US housing data on Tuesday. Construction on new US homes declined 0.5% in November to an annualised rate of 1.427 million, while building permits for new homes tumbled 11.2% to 1.342 million in the month.

Gold for February delivery jumped $27.70 to close at $1,825.40 per ounce on Comex. Silver for March delivery climbed $1.07 to $24.27 per ounce, to record its highest closing in eight months.

Copper prices rose 2 cents to $3.80 per pound, while March palladium gained over 4% to $1,733.50 per ounce and platinum prices added more than 2% to reach $1,013.00 per ounce on Tuesday.

What are expectations: Traders will keep an eye on comments from Fed officials regarding their monetary policy, which could impact the US dollar and, in turn, determine the direction of gold prices ahead.

Markets will also focus on major economic data. Any concerns around the global economy would support the yellow metal.

Other Markets: European trading indices closed mostly lower on Tuesday, with the DAX 40, CAC 40 and STOXX Europe 600 down by 0.42%, 0.25% and 0.40%, respectively, and the FTSE 100 up by 0.13%.

Support & resistances for today

Market snapshot

What else to watch today

Germany’s GfK consumer climate indicator, UK’s public sector net borrowing and CBI distributive trades survey’s retail sales balance, Indonesia’s value of loans, Italy’s construction output, Reserve Bank of India’s monetary policy meeting minutes, Mexico’s consumer spending and GDP aggregate demand , US MBA mortgage applications, current account, existing home sales, CB consumer confidence, gasoline stocks, crude oil stocks and distillate stockpiles, Brazil’s current account and foreign direct investment, Canada’s inflation rate, Russia’s producer prices, China’s foreign direct investment, as well as Argentina’s unemployment rate and monthly economic activity estimator.