We will review current trade reports, trends, indices, stock prices, bonds, foreign exchange and commodities, and analyst recommendations.
Today, Asia’s main indices are showing mixed performance. The Nikkei is down 0.2%, the Hang Seng is down 0.3%, while the Shanghai Stock Exchange is up 0.7%, and the Kospi is up 1.2%.
The largest bank in Southeast Asia, DBS Group, released its financial results this morning, showing a 2% increase in net profit in the fourth quarter to $2.39 billion compared to the same period last year. The bank also maintained its net interest profit forecast for 2024.
Meanwhile, futures are holding steady this morning.
Last night on Wall Street, the leading indexes traded in low volumes but closed in a positive zone. The Nasdaq rose by 0.1%, the Dow Jones increased by 0.4%, and the S&P 500 saw a 0.2% increase.
As part of the earnings season, share prices of Snap plummeted by over 30% in after-hours trading following the release of its financial results. The company reported a profit of 8 cents per share, compared to an anticipated 6 cents per share. The company’s revenues were $1.36 billion, compared to the analysts’ forecast of $1.38 billion. Looking forward, Snap expects an adjusted EBITDA loss of between 55 and 95 million dollars in Q1 2022, exceeding analysts’ forecasts of a 21.9 million dollar loss.
In contrast, shares of Ford increased by around 6% in after-hours trading after exceeding analysts’ profit and revenue expectations. The company also released its forecasts for the remainder of the year, projecting an adjusted EBITDA profit of between 10-12 billion dollars, compared to initial forecasts of 8-9 billion dollars.
In the US debt market, the yield on the 10-year government bond significantly dropped last night to around 4.07%, after reaching a one-and-a-half month high of 4.16% earlier this week. This comes after the Fed Chair emphasized the cautious approach towards interest rate cuts in the US.
In the commodity market, oil prices are experiencing a slight increase this morning. The price of a Brent barrel is currently $78.7.
The Central Bank of Australia decided to keep the interest rate steady at 4.35% last night (Tuesday). Ofer Klein, Head of the Economics and Research Department at Harel Insurance and Finance Group, explains that the bank has made some changes, such as updating the members of the Monetary Council, reducing the number of decisions per year to eight, and adding a post-decision press conference, similar to major central banks in the US and Europe.
However, the bank left the interest rate unchanged at 4.35%, as was expected. In a press release, the bank stated that despite the progress in inflation, interest rate hikes should not be dismissed considering the positive growth, strong labor market, and updated forecasts that do not expect inflation to return to its target before the end of 2025. This signals that markets should lower their expectations for an interest rate cut in the coming months. Looking ahead, the bank does not see significant chances of raising the interest rate, and it does not expect the first cut before the second half of the year, especially considering the high interest rates and the weakness in China’s real estate industry (Australia’s largest trading partner).
No significant macro data is expected to be released later today.
This week, Bank Hapoalim’s economists discussed the economic indicators in the Eurozone, explaining that they continue to show weak activity. The Purchasing Managers’ Index for the industrial sector slightly increased to 46.6 points, but it still indicates a contraction in activity. Other confidence indices, such as the Consumer Confidence Index and the Economic Confidence Index, remain at a low level. In Q4 2023, the Eurozone recorded a 0.1% annual growth, slightly higher than expected. The Eurozone’s 2023 economy grew by just 0.5%.
The average consumer price index in the Eurozone decreased by 0.4% in January, and the annual rate moderated to 2.8%. Core inflation in the last 12 months moderated to 3.3%. The capital market in the Eurozone also saw some easing in expectations for an interest rate cut. The capital market anticipates a 75% probability that the ECB interest rate will start to decrease in April, and by the end of the year, there will be five interest rate cuts to a level of 2.75%.
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