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Tuesday, January 31, 2023

The news shaping the markets today

French President Emmanuel Macron said fighter jets could be sent to Ukraine if certain conditions are met. US crude oil prices traded higher this morning.


China’s industrial profits fell by 4.0% year-over-year to 8.40 trillion yuan in 2022, following a 3.6% decline in the prior period, which exerted pressure on the CNY/USD forex pair.


Singapore’s unemployment rate eased to 2.0% in the fourth quarter, versus 2.1% in the prior quarter, sending the SGD/USD pair lower in forex trading this morning.


Australia’s retail sales contracted by 3.9% to A$34.47 billion in December, versus 1.7% growth in the prior month. The latest reading came in worse than market expectations of a 0.3% decline and exerted pressure on the AUD/USD forex pair.


Japan’s retail sales grew 3.8% year-over-year in December, exceeding market estimates of 3% growth, which sent the JPY/USD pair higher in forex trading this morning.

 

What’s happening: Shares of Koninklijke Philips NV rose on Monday, after the company released financial results for its fourth quarter.

What happened: The health technology company reported better-than-expected earnings for its latest quarter on Monday.

Philips also announced plans to cut thousands of jobs to restore profitability.

How were the results: The Amsterdam-based company reported some growth in earnings for the last three months of 2022, which exceeded market estimates.

  • Comparable sales rose 3%, higher than market expectations of a 5% decline.
  • Adjusted EBITA for the quarter rose slightly to €651 million, from €647 million in the year-ago period, and came in ahead of the consensus estimates of €428 million.

Why it matters: Last year, Philips was impacted by a recall of its sleep apnoea face masks and a plunge in demand for its respirators due to the easing of covid-19 infections.

The maker of medical devices announced plans to cut another 6,000 jobs to improve its profitability, taking the total layoffs announced to around 13% of its total workforce. Management said half the job reductions will be made this year, while the rest will be executed by 2025.

The jobs cuts announced by Philips followed several layoffs announced by technology giants, including Microsoft, Amazon and Alphabet.

Philips added it continued to face supply chain issues and that it expects gradual improvements this year. Management guided to low-single-digit growth in comparable sales on high-single-digit margins for 2023.

How shares responded: Shares of Philips jumped 5.9% to close at $17.99 on Monday, following the release of quarterly results. The stock has gained around 15% over the past month.

What to watch: Investors will continue monitoring the discussions with the US Department of Justice on a settlement after the recall of Philips’s sleep devices.

The markets today

European stocks will be in focus today ahead of the Eurozone’s GDP report

Context: European markets settled mostly lower on Monday as investors awaited interest rate decisions from major central banks.

Details: The Federal Reserve’s FOMC (Federal Open Market Committee) is scheduled to commence its two-day policy meeting today and is expected to announce its interest rate decision on Wednesday. The US central bank is widely expected to hike interest rates by 25 bps.

The Bank of England and the European Central Bank are also scheduled to meet this week and expected to hike their benchmark rates by 50bps.

Investor sentiment was hurt by the surprise contraction in Germany’s economy in the fourth quarter. The country’s GDP fell by 0.2% in the final three months of 2022, versus 0.5% growth in the earlier quarter.

Spain’s inflation accelerated to 5.8% in January, from a 13-month low of 5.7% in the prior month. Retail sales in Spain grew by 4% year-over-year in December, recovering from a 0.5% decline a month ago.

Germany’s DAX 40 fell 0.16%, while France’s CAC 40 lost 0.21% on Monday. The STOXX Europe 600 index fell 0.17% to close at 454.40 on Monday, with most sectors closing in the negative zone. The tech sector was among the worst performers, declining around 1.7%, while food and beverage stocks bucked the overall market trend and moved higher.

London’s FTSE 100 rose 0.25% to 7,784.87 amid gains in consumer staples and industrials shares.

What are expectations: Investors await GDP growth data from the Eurozone today. The region’s economy had grown 2.3% year-over-year in the third quarter and is expected to expand by 1.6% in the fourth quarter.

Other Markets: US trading indices closed lower on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.77%, 1.30% and 2.09%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD  – 1.0853 and 1.0858 Positive
USD/CAD – 1.3388 and 1.3399 Negative
WTI Crude Oil – 77.90 and 78.03 Positive
FTSE 100 – 7782.06 and 7792.06 Negative
DAX 40 – 15123.19 and 15146.19 Negative

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0851, -0.01%) Dow ($33,800, 0.04%) Brent ($84.46, -0.1%)
GBP/USD (1.2359, 0.06%) S&P500 ($4,037, 0.11%) WTI ($77.82, -0.1%)
USD/JPY (130.21, -0.18%) Nasdaq ($11,982, 0.12%) Gold ($1,925, 0.1%)

What else to watch today

Saudi Arabia’s gross domestic product, South Africa’s money supply M3, private sector credit and balance of trade, France’s GDP growth rate, inflation rate, producer prices and household spending, Germany’s retail sales, unemployed persons, unemployment change, unemployment rate and import prices, Turkey’s tourism revenues, balance of trade and tourist arrivals, Italy’s unemployment rate and gross domestic product, Spain’s current account, UK’s consumer credit, mortgage lending, mortgage approvals and net lending to individuals, India’s infrastructure output, Mexico’s gross domestic product, Canada’s monthly GDP, US employment cost index, Redbook index, S&P CoreLogic Case-Shiller 20-city home price index, FHFA house price index, Chicago PMI, CB consumer confidence and Dallas Fed services index, Russia’s money supply M2, as well as Brazil’s net payrolls.


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