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Trends & Analysis
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Costco shares slide after earnings miss
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Is Walmart recession-proof?
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EUR/USD slides despite strong Germany data
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Will rates ruin the S&P 500?

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News

Us Stocks Record Second Straight Weekly Gains

The news shaping the markets today

Singapore’s IHS Markit PMI fell to 54.4 in January, from December’s five-month high of 55.1. However, the recent reading representing growth in the private sector for 14th straight month, lending support to the SGD/USD forex pair.


Australia’s retail sales contracted by 4.4% in December, following 7.3% growth in the previous month. However, the latest figure coming in-line with expectations sent the AUD/USD pair higher in forex trading this morning.


Colombia’s annual inflation rate fell to 6.94% in January, from 5.62% in December. Although the country recorded the highest reading since September 2016, the COP/USD forex pair came under pressure after the news.


Canada’s Ivey PMI rose to 50.7 in January, from 45 in the earlier month, sending the CAD/USD pair slightly higher in forex trading this morning.


Mexico’s car production fell 9.1% year-over-year to 253,400 units in January, representing the seventh consecutive monthly contraction, exerting pressure on the MXN/USD forex pair.

 

What’s happening: US stocks closed mostly higher on Friday, with the Nasdaq 100 leading the gains.

What happened: Robust earnings from Amazon provided a boost to the markets, which ended a volatile week on a strong note.

An unexpected surge in jobs growth also lifted investor sentiment, leading to major US indices recording their best week this year.

Why it matters: Concerns around the Fed hiking its benchmark interest rate earlier than anticipated has dampened market sentiment since the beginning of the year.

The decline in Meta Platforms’s stock, following weak quarterly results, led to a sharp downturn in markets on Thursday, sending the Nasdaq 100 lower by around 4%. This created attractive buying opportunities.

Amazon reported upbeat earnings for its fourth quarter after the closing bell on Thursday, which led to a spike of around 14% in its stock on Friday, providing support to the overall US equity market.

Shares of social media companies rebounded on Friday, after recording losses in the previous session. Snap’s stock jumped around 59% after the company reported upbeat results for the fourth quarter and issued a strong outlook. Shares of Pinterest gained 11% following stronger-than-expected quarterly results. Twitter’s shares also climbed 7% ahead of the company’s earnings call, which is due on February 10.

Market sentiment was further lifted by the US Labor Department reporting a rise in nonfarm payrolls by 467,000 for January, sharply higher than the consensus estimate of 150,000 job adds. The reading for December was also revised higher to 510,000 jobs, versus the earlier reported figure of 199,000.

The Dow Jones index slipped 21.46 points to settle at 35,089.74 on Friday, after swinging sharply during the session. The S&P 500 rose 0.52% to 4,500.53, while the Nasdaq 100 surged 1.33% to settle at 14,694.35. The tech-laden index gained 2.4% for the week.

All three major stock indices settled their first week of February in the green, also recording their second straight weekly gains. The S&P 500 and Nasdaq 100 indices notched their best week of the year. Energy stocks were among the top performers, after crude oil prices surged to a seven-year high on Friday.

The 10-year Treasury yield rose above 1.9% on Friday, reaching its highest level since December 2019. The benchmark yield has climbed from 1.51% at yearend 2021, with the Federal Reserve signalling multiple rate hikes this year.

What to watch: With no major economic data scheduled for release today, investors will keep an eye on earnings results from some big companies this week, including Take-Two Interactive, Pfizer, Enphase Energy, Walt Disney, Uber Technologies, Coca-Cola, and Under Armour.

The markets today

The Canadian dollar will be in focus today after recording losses on Friday

 

Context: The CAD/USD forex pain settled lower on Friday, following the release of a weak jobs report from Canada.

Details: Data released by Statistics Canada on Friday showed that the economy lost higher-than-expected jobs in January. This was also the first decline since May 2021, with the Omicron wave hitting the economy.

Canada shed 200,100 jobs in January, versus expectations of a loss of 117,500 jobs. The participation rate fell to 65% in January, from 65.4% in December, while the unemployment rate rose to 6.5%, from 6% a month ago. However, analysts projected a speedy recovery in Canada’s labour market in the coming months.

Despite Canada being a major exporter of oil, the CAD/USD pair did not respond to the rise in crude prices. Although WTI crude prices gained 2.3% to close at $92.31 per barrel on Friday, the forex pair remained under pressure due to the weaker jobs report.

The CAD/USD forex pair lost around 0.5% to close at 1.2741 on Friday.

What to watch: Traders will keep an eye on the Bank of Canada’s interest rate decision. The central bank is expected to begin raising rates in March despite the disappointing jobs data.

Rising covid-19 cases remains a major concern for markets, with total global infections surging to 395.8 million.

Other Markets: European trading indices closed lower on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 down by 0.17%, 1.75%, 0.77% and 1.38%, respectively.

Support & resistances for today

Technical Levels News Sentiment

USD/CAD – 1.2740 and 1.2750



Negative


GBP/USD – 1.3529 and 1.3538


Negative


Nasdaq 100 – 14,653.30 and 14,779.19


Positive


S&P 500 – 4,523.41 and 4,539.90


Positive


Silver – 22.614 and 22.815 Positive

 

Market snapshot

What else to watch today

Germany’s industrial production, UK’s Halifax house price index, France’s foreign exchange reserves, China’s foreign exchange reserves, Brazil’s car production, car registrations and Central Bank of Brazil’s focus market readout, Spain’s consumer confidence indicator, Russia’s foreign exchange reserves, Turkey’s treasury cash balance as well as US consumer credit change.


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