Market Updates: PMI Day, American Express Earnings, and Japan’s Rate Hike
Hello traders! 👋 Today’s highlights include PMI releases, earnings from major players like American Express and Burberry, and Japan’s surprise rate hike. Let’s unpack the key developments.
Earnings Watch: American Express and Burberry
The S&P 500 closed above 6,100 for the first time, as optimism drives equities higher. Earnings are in focus today with:
American Express (AXP): Analysts are keen to assess post-earnings performance. With steady consumer spending and strong travel-related card growth, AXP shows resilience amidst economic uncertainties.
Burberry (BRBY): After a challenging H1 with a 22% sales drop, Burberry’s Q3 results are pivotal. CEO Joshua Shulman’s turnaround plan faces scrutiny, with expectations of a 19.5% annual sales decline. Inventory management and holiday sales will be key to evaluating recovery efforts.
GE Aerospace Shines, EA and AAL Struggle
GE Aerospace: Hit a 24-year high after reporting Q3 revenue growth of 14% to $10.81 billion, driven by a 19% rise in commercial engines. Investor confidence soared with a $7 billion stock buyback and a 30% dividend hike.
American Airlines (AAL): Despite better-than-expected Q4 earnings, AAL predicts a Q4 loss of $0.20–$0.40 per share. Challenges include regaining corporate clients and intense competition for business travel. Shares fell 8.7% to $17.03.
Electronic Arts (EA): Shares nosedived 19%, marking their worst day since the dot-com bubble. Weak performance in the EA Sports FC franchise and disappointing Dragon Age results drove the decline.
Japan’s Rate Hike: Portfolio Implications
The Bank of Japan (BoJ) raised rates to 0.5%, the highest since 2008, aiming to combat inflation and rising wages. Key impacts:
Inflation hit 3.6%, while the yen strengthened.
Potential ripple effects include volatility in global bond markets and increased focus on JPY crosses and Japanese equities.
Diversification remains critical in managing potential portfolio impacts.
Movers & Shakers
Oil Prices: Fell as President Trump urged OPEC and Saudi Arabia to lower prices, citing the Ukraine war’s impact on crude costs.
WTI: Down 1.05% to $74.81.
Brent: Fell 0.70% to $78.45.
Coal stocks briefly surged, with Alliance Resource Partners hitting highs not seen since 2015.
Adidas (ADS.DE): Down 0.34% as it plans to cut 500 HQ jobs despite strong holiday profits and 19% sales growth.
Puma (PUM.DE): Plunged 22.5% after missing profit expectations, with a 7.5% decline in net income. Analysts downgraded the stock amidst cautious investor sentiment.
Moderna (MRNA): Climbed 10.1%, driven by optimism around bird flu vaccine funding and AI-based cancer research.
Coming Up Today
German PMI (January, flash):
Release: 9:30 AM GMT.
Manufacturing expected to rise slightly to 42.1. Watch EUR pairs.
UK PMI (January, flash):
Release: 10:30 AM GMT.
Last month: Services PMI at 51.1, Manufacturing at 47. GBP crosses in focus.
US PMI (January, flash):
Release: 3:45 PM GMT.
Services PMI forecast: 56.6, Manufacturing: 49.6. USD pairs expected to move.
US Existing Home Sales (December):
Release: 4:00 PM GMT.
Forecast: 3% decline month-over-month. USD crosses in focus.
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