The news shaping the markets today

UN chief Antonio Guterres warned of a “wider war” as the Russia-Ukraine conflict intensifies. WTI crude prices rose almost 1% this morning.

Japan’s foreign exchange reserves grew to $1.25 trillion in January, from $1.228 trillion in the prior month. Despite this being the third consecutive month of increase in reserves, the JPY/USD forex pair remained under pressure.

Japan’s average cash earnings rose 4.8% year-over-year in December, the fastest pace since January 1997. This was also the twelfth straight month of increase, which sent the Nikkei 225 higher this morning.

Australia’s trade surplus declined to A$12.23 billion in December, from a five-month high of $13.47 billion in the previous month. The figure also came below analyst forecasts of an A$12.5 billion gain and sent the AUD/USD pair lower in forex trading this morning.

UK’s retail sales grew 3.9% year-over-year in January, decelerating from 6.5% growth in the previous month. The news supported the GBP/USD forex pair.

What’s happening: Shares of Pinterest edged lower in the extended session on Monday, after the company released its fourth quarter results.

What happened: Pinterest reported a hit to its performance from continued weakness in ad budgets.

The company also disappointed markets on another important metrices.

How were the results: The San Francisco, California-based company reported disappointing sales, but its earnings beat expectations.

• Revenues grew merely 4% year-over-year to $877 million, missing the consensus estimates of $885 million.
• Earnings came in at 29 cents a share, exceeding Wall Street expectations of 27 cents per share.

Why it matters: Companies around the world restricted their ad budgets in 2022 in the face of high inflation as well as concerns around the global economic outlook due to the aggressive interest rate hikes by major central banks.

Pinterest joined its much larger peers Alphabet, Meta Platforms and Snap to announced fourth-quarter results that reflected continued weakness in ad budgets.

The image sharing and social media site reported a 4% year-over-year rise in monthly active users to 450 million. This, however, fell short of market expectations of 452 million. ARPU (average revenue per user) for the US and Canada grew 6% to $7.60 in the fourth quarter.

Pinterest announced that its board had authorised a share buyback program of up to $500 million of its Class A common stock over the next 12 months. Management also guided to revenue growth in the “low single digits” for the first quarter. This, too, fell short of the consensus estimate of 6.9% growth.

How shares responded: Pinterest’s shares rose 1.5% to close at $27.89 on Monday, in anticipation of the fourth-quarter print. However, the stock fell more than 2% to $27.33 in extended trading, following the release of results. Shares of the company are up almost 22% year to date.

What to watch: Investors will continue monitoring rising competition from other social media platforms and search companies. Markets also await greater clarity around Pinterest’s cost cutting measures, following some reports of planned layoffs and office closures.

The markets today

Gold will be in focus today ahead of Fed Chair Powell’s speech

Context: Gold slipped to near a one-month low on Monday, continuing its decline from last week.

Details: Gold prices slipped to one-month lows on Monday and continued to hover around this level in early trading on Tuesday. The yellow metal has been under pressure due to strength in the US dollar.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, maintained a broad uptrend through most of Monday’s trading session. Strength in the US dollar makes gold more expensive for holders of foreign currencies. However, the US dollar index came under pressure later in the session and ended the day down 0.13% at 103.49, lending some support to the yellow metal.

All eyes are now on Federal Reserve Chairman Jerome Powell’s speech. The US Fed had raised its fed funds rate by 25bps to 4.5%-4.75% earlier this month. Although policymakers reduced the extent of rate hikes for a second straight meeting, investors remain concerned about the central bank’s next moves. This was especially after Powell hinted at continued rate hikes till the inflation target of 2% is reached.

Gold contracts for March delivery rose 0.31% to close at 1,885.30 on Monday, while silver added 0.42% to settle at 22.330.

What are expectations: Investors await Fed Chairman Jerome Powell’s speech, scheduled for later today. Markets are looking for further clarity on some of the comments made by Powell after the central bank’s meeting last week.

Other Markets: US trading indices closed lower on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.10%, 0.61%, and 1.00%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Germany’s industrial production, UK’s Halifax house price index, 5-year treasury gilt auction and BBA mortgage rate, France’s balance of trade, non-farm payrolls and foreign exchange reserves, Spain’s industrial production and foreign exchange reserves, Singapore’s foreign exchange reserves, Mexico’s auto production and gross fixed investment, Russia’s foreign exchange reserves, Canada’s balance of trade, US balance of trade, IBD/TIPP economic optimism and Fed Chair Powell Speech, and Brazil’s car production and new car registrations.