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Trends & Analysis
News

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Thursday, February 02, 2023

The news shaping the markets today

The US is preparing to offer a $2.2 billion military aid package to help Ukraine in its war with Russia. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose this morning.


New Zealand’s building permits fell 7.2% to 3778 in December, after 6.7% growth a month ago. Despite this, the NZD/USD pair rose in forex trading this morning.


Brazil’s central bank held its key Selic rate steady at 13.75% for the fourth meeting in a row, lending support to the BRL/USD forex pair.


The Saudi Central Bank raised its repo rate by 25 bps to 5.25% at its latest meeting, sending the SAR/USD pair higher in forex trading this morning.


UAE’s central bank hiked the base rate of its overnight deposit facility by 25 bps to 4.64%, lending support to the AED/USD forex pair.

 

What’s happening: Shares of T-Mobile US, Inc edged higher on Wednesday, after the company released results for its fourth quarter.

What happened: The US wireless carrier added thousands of wireless subscribers during the latest quarter.

However, T-Mobile was still not able to meet revenue expectations for the quarter amid stiffening competition.

How were the results: The Bellevue, Washington-based company reported a decline in sales for the quarter, which also missed market views.

  • Revenues fell 2.5% year-over-year to $20.27 billion, missing the consensus estimates of $20.6 billion.
  • Earnings came in at $1.18 per share, topping Wall Street expectations of $1.10 per share.

Why it matters: T-Mobile has recently added thousands of wireless subscribers, driven by discounts on smartphones, its edge in 5G networks and industry-low plan prices.

The US carrier added 927,000 postpaid phone subscribers during the fourth quarter, which is the highest among its peers.

Total service revenues grew 4% year-over-year to $15.5 billion, while postpaid service revenues rose 7% year-over-year to $11.7 billion. The company also generated free cash flows of $2.2 billion.

The company’s peers, including Verizon and AT&T, increased their handset offerings during the holiday season to tap surging demand for iPhones following the latest launch from Apple, which negatively impacted T-Mobile’s growth.

T-Mobile’s churn rate came in highest than rivals at 0.92%, with Verizon recording a churn of 0.89% and AT&T’s rate coming in at 0.84% for monthly phone subscribers.

The company is looking to add 5-5.5 million net monthly bill paying subscribers in 2023, down from 6.4 million additions recorded last year.

Management guided to adjusted profits of $28.7-$29.2 billion for 2023, representing 10% year-over-year growth at the mid-point. T-Mobile also projected Sprint merger synergies of $7.2-$7.5 billion for the year.

How shares responded: T-Mobile’s shares rose 1.1% to close at $150.97 on Wednesday, following the release of quarterly results. The stock has gained around 9% over the past month.

What to watch: Investors will continue monitoring rising competition from T-Mobile’s major rivals Verizon and AT&T.

The markets today

European stocks will be in focus today ahead of the ECB’s interest rate decision

Context: European markets closed mostly flat on Wednesday, as investors waited on the sidelines for rate decisions from major central banks.

Details: Investors remained cautions as the US Fed’s meeting concluded after European markets closed on Wednesday. The Fed raised its benchmark interest rates by 25 basis points to a range of 4.5% and 4.75%, which took borrowing costs to their highest level since 2007.

The eurozone unemployment rate came in unchanged at 6.6% in December, while the annual inflation rate declined to an eight-month low of 8.5% in January, versus 9.2% in the prior month. The figure was also better than market expectations of 9%.

The S&P Global Eurozone manufacturing PMI improved to 48.8 in January, from 47.8 in the earlier month.

The STOXX Europe 600 index edged lower by 0.03% to 453.09 on Wednesday, with auto stocks leading the gains. Healthcare stocks closed lower by more than 1%, exerting pressure on the index. Germany’s DAX 40 gained 0.35%, while France’s CAC 40 lost 0.07%.

London’s FTSE 100 slipped 0.14% on Wednesday, ahead of the Bank of England’s interest rate decision. The BoE is expected to raise interest rates by 50 bps to 4.0% on Thursday.

What are expectations: Investors await the release of the European Central Bank’s interest rate decision today. The central bank is widely expected to hike its key interest rate by 50 bps in February and March.

Other Markets: US trading indices closed higher on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.01%, 1.05% and 2.16%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD  – 1.0985 and 1.0990 Positive
USD/CHF – 0.9084 and 0.9094 Positive
S&P 500 – 4109.68 and 4136.18 Positive
Nikkei 225 – 27329.84 and 27358.34 Positive
Copper – 4.1788 and 4.1796 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.1018, 0.25%) Dow ($34,161, 0.04%) Brent ($83.06, 0.3%)
GBP/USD (1.2399, 0.22%) S&P500 ($4,153, 0.51%) WTI ($76.75, 0.4%)
USD/JPY (128.54, -0.32%) Nasdaq ($12,550, 1.09%) Gold ($1,968, 1.3%)

What else to watch today

Germany’s balance of trade, France’s government budget value and new passenger car registrations, Brazil IPC-Fipe inflation, Spain’s unemployment change and number of foreign tourist arrivals, Mexico’s foreign exchange reserves and Mexico’s government budget value, Turkey’s Gross foreign exchange reserves and balance of trade, US Challenger job cuts, unit labour costs, nonfarm labour productivity, initial jobless claims, continuing jobless claims, factory orders, natural gas stocks change and total vehicle sales, UK’s interest rate decision, Canada’s value of building permits, as well as Argentina’s tax revenue.


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