North American News
US major indices close mixed. Dow up. NASDAQ lower
- S&P index modestly lower
The major US indices are closing the day with mixed results. After two days of oversize gains in the NASDAQ with gains of over 2% on each day, the NASDAQ lost -0.27%. The Dow was the outperformer and the S&P was down but only by a small amount.
The final numbers showing:
- Dow Industrial Average rose 104.40 points or 0.31% at 33733.95
- S&P index fell -2.88 points or -0.07% at 4016.94
- NASDAQ index fell -30.13 points or -0.27% at 11334.28
- Russell 2000 fell -5.15 points or -0.27% at 1885.61
Microsoft revenues $52.70 billion versus $52.97 billion. EPS $2.32 versus $2.30 estimate
- Adjusted EPS $2.32 versus $2.30
Microsoft is out with their earnings early and they are mixed.
- Revenues came in at $52.70 billion versus $52.97 billion expected
- Adjusted earnings-per-share came in at $2.32 versus $2.30
- Productivity and business processes revenues $17 billion versus $16.8 billion expected
- Intelligent cloud revenues $21.5 billion versus $21.43 billion expected
- More personal computing revenue $14.24 billion versus expected $14.74 billion
- capital expenditures $6.27 billion versus expected $6.63 billion
- Azure revenues 31% versus 30.6% estimate
Microsoft shares are trading up 4.53% at $252.95 (4:03 PM ET)
In other earnings:
Texas Instruments:
- Earnings-per-share $2.13 versus $1.98 expected
- Revenues came in at $4.67 billion versus $4.62 billion
Texas Instruments shares are trading at $178.87 up from $176.99 at the close (4:06 PM ET)
Intuitive Surgical:
- Adjusted earnings-per-share $1.23 versus expected $1.25
- Revenues $1.66 billion versus $1.67 billion expected
Intuitive surgical stock is trading at $254.01 down -1.54% from the closing level of $257.98 (4:10 PM ET)
US treasury auctions off $42 billion of two-year notes at a high yield of 4.139%
- WI level at the time of the auction was 4.152%
- High-yield 4.210%.
- WI level at the time of the auction 4.152%
- Bid to cover 2.94X vs 2.59X
- Tail 1.3 basis points versus six month average of 0.2 basis points.
- Directs 18.73% versus a six month average of 21.4%.
- Indirects 64.99% versus a six month average of 57.4%.
- Dealers 16.28% versus six-month average of 21.2%
US January Richmond Fed manufacturing index -11 vs -4 expected
- Richmond Fed index
- Prior was +1
- Services index -6 vs -11 prior
- Manufacturing shipments -3 vs +5 prior
- New orders -24 vs -4 prior
- Backlog of orders -31 vs -23
- Employees -3 vs +3 prior
- Prices paid 7.91 vs 9.08 prior
- Wages 41 vs 37 prior
US January S&P Global flash manfacturing PMI 46.8 vs 46.0 expected
- US January S&P Global flash data
- Manufacturing 46.8 vs 46.0 expected
- Prior was 46.2
- Services PMI 46.6 vs 45.0 expected
- Prior services 44.7
- Composite 46.6 vs 44.6 prior
- New orders declined, led by manufacturing
- Cost burdens increased for the first time in eight months
- Backlogs of work fell
- Business optimism hit a four-month high
This is a better reading but below 50 still points to a contraction.
Commenting on the US flash PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:
“The US economy has started 2023 on a disappointingly soft note, with business activity contracting sharply again in January. Although moderating compared to December, the rate of decline is among the steepest seen since the global financial crisis, reflecting falling activity across both manufacturing and services.
“Jobs growth has also cooled, with January seeing a far weaker increase in payroll numbers than evident throughout much of last year, reflecting a hesitancy to expand capacity in the face of uncertain trading conditions in the months ahead. Although the survey saw a moderation in the rate of order book losses and an encouraging upturn in business sentiment, the overall level of confidence remains subdued by historical standards. Companies cite concerns over the ongoing impact of high prices and rising interest rates, as well as lingering worries over supply and labor shortages.
“The worry is that, not only has the survey indicated a downturn in economic activity at the start of the year, but the rate of input cost inflation has accelerated into the new year, linked in part to upward wage pressures, which could encourage a further aggressive tightening of Fed policy despite rising recession risks.”
Commodities
Gold could surge higher above $1,970 – TDS
Gold price touched a nine-month high on Tuesday. The yellow metal needs to surpass the $1,970 region to firm further, strategists at TD Securities report.
Break below $1,900 to spark trend follower liquidations
“The bar is low for price action to catalyze yet another CTA buying program in Gold. However, algo trading flows are expected to remain limited with substantial purchases only likely above the $1,970 range. Still, Gold prices could struggle to firm further in the absence of the single-largest buyer of Gold over the past months.”
“On the downside, a break below the $1,900 range is required to spark trend follower liquidations.”
Gold bulls are testing critical resistance, traders eye key events
- Gold price is running into a critical resistance area on the charts.
- A sell-off in Gold price and capitulation of the bulls could lead to a significant run towards $1,900.
The Gold price is making progress on the day into the final push on Wall Street and rallied from a low of $1,917.22 to a high of $1,942 on the day so far.
Gold price rose to the highest in nine months as the US Dollar and bond yields came under pressure following the start of the week’s 1% drop in leading economic indicators in December which solidified the dovish sentiment surrounding the Federal Reserve, Fed, that is now expected to announce another interest-rate hike when its policy committee meets next week.
The US Dollar was weakening, making the metal more affordable for international buyers while the Fed officials are out on the blackout week ahead of the highly anticipated Fed interest rate decision. the Gold price flourished with investors now awaiting US economic data due this week that could impact the Federal Reserve’s policy path.
Federal Reserve is eyed, sentiment mixed
Investors are banking on the Federal Reserve raising rates by 25 basis points (bps) at the January 31 – February 1 policy meeting, after slowing its pace to 50 bps in December, following four straight 75-bp hikes. Meanwhile, the Gold price tends to benefit due to lower interest rates that otherwise decrease the opportunity cost of holding the non-yielding asset.
The most hawkish of comments came from St. Louis Federal Reserve’s President James Bullard who said US interest rates have to rise further to ensure that inflationary pressures recede.
”We’re almost into a zone that we could call restrictive – we’re not quite there yet,” Bullard said Wednesday in an online Wall Street Journal interview. Officials want to ensure inflation will come down on a steady path to the 2% target. “We don’t want to waver on that,” he said.
“Policy has to stay on the tighter side during 2023” as the disinflationary process unfolds, Bullard added.
Bullard has pencilled in a forecast for a rate range of 5.25% to 5.5% by the end of this year.
However, economic reports, such as Producer Price Index and Retail Sales have recently shown disinflationary tendencies, reinforcing expectations that the Fed will continue to reduce its tightening pace in upcoming meetings.
With that being said, analysts at ANZ Bank recently wrote a note, entitled, ”Fed tightening not done yet.”
”So far in early 2023, US data releases have indicated a mild easing in inflationary pressures and softer demand. This indicates the Fed’s aggressive tightening last year is starting to take effect,” the analysts explained. ”Weakness in housing is evident (existing home sales fell 17.8% last year), manufacturing activity has faltered and Retail Sales are returning to trend.”
Meanwhile, analysts at Brown Brothers Harriman have also of the opinion that the market is underestimating the potential for a higher for longer Federal Reserve. ”Core Personal Consumption Expenditures, PCE, has largely been in a 4.5-5.5% range since November 2021,” they said. ”We think the Fed needs to see further improvement before even contemplating any sort of pivot.”
WTI crude futures settles at $80.13
- Down -$1.49 or -1.83%
The price of WTI crude oil futures are settling at $80.13. That’s down -$1.49 or -1.83%
The high for the day reached $82.22. The low extended to $79.66.
Natural gas futures falls after buyers above the 200 hour MA failed
- The trend remains to the downside
The price of natural gas futures are trading sharply lower with the prices down close to 4% on the day. The move lower comes after the price tried to move above its 200 hour moving average at $3.50. The high price reached $3.59 before rotating back to the downside. More recently, the 100 hour moving average has been broken at $3.34. The current price trades at $3.30.
EU News
European indices are mixed at the close of the day
- German Dax and UK FTSE end lower
The major European indices are ending the day with mixed results.
The final numbers are showing:
- German Dax fell -0.07%
- France’s CAC rose 0.26%
- UKs FTSE 100 fell -0.35%
- Spain’s Ibex rose 0.26%
- Italy’s FTSE MIB rose 0.24%
Other News
US Department of Justice seeks divestiture of Google ad manager suite
- DOJ sites the ad giants dominance over the digital advertising market
The US Department justice sues Google and seeks divestiture of Google ad manager suite including Google’s ad exchange. The suit comes over alleged abuse of domination of online ad market.
Google dominates the digital advertising market.
Germany is to send Leopard tanks to Ukraine
- Germany also authorizes other countries to send their Leopard tanks
Germany is to send Leopard tanks to Ukraine. This is according to Spiegel citing sources.
In addition they have said that they will allow other countries such as Poland to do the same.
Cryptocurrency News
FBI says North Korea-related hacker groups behind $100m US crypto heist
Info via Reuters:
- Two hacker groups associated with North Korea, the Lazarus Group and APT38, were responsible for the theft last June of $100 million from U.S. crypto firm Harmony’s Horizon bridge, the Federal Bureau of Investigation said on Monday.
On Jan. 13, the groups used a privacy protocol called Railgun to launder over $60 million worth of ethereum stolen during the theft in June, the FBI said in a statement
A portion of the stolen ethereum was subsequently sent to several virtual asset providers and converted to bitcoin, the FBI said.
Binance Coin Price Forecast: BNB bulls might have played their hand here with risk of a 10% drop
- Binance Coin price sees bulls hitting an important level as RSI is overbought again.
- BNB enters a risky game where price action could be at risk of fading near 10%.
- Traders will watch what the daily close brings to see if equities can push higher.
Binance Coin (BNB) price sees bulls playing a risky game as in early morning trading this Tuesday during the ASIA PAC session, $323.80 got hit and immediately saw price action drop lower. This level was marked up from the tops of June of last year and has been, although chopped up, still holding some relevance when it comes to tops or closes. If bulls took too much profit and gave bears a chance to enter, a drop below $300 would not be impossible.
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