Earnings seasons issues: who is next?

After the report, Meta Platforms shares fell 22.9% in aftermarket and pulled shares of other social network operators – Pinterest, Snap and Twitter. Shares of Snap fell more than 18% after the close of trading, Pinterest – almost 10%, Twitter – about 8%. Earlier, PayPal traded down 24.6%, Amazon shares fell more than 3%, the online retailer is due to report financial results on Thursday. Microsoft fell in price by almost 1%.The recently rebranded Meta company’s fourth-quarter earnings and user numbers fell short of Wall Street analysts’ expectations, with quarterly revenue below consensus. Despite this, US indices closed in the main session in positive territory, so NASDAQ COMP showed +0.5% to 14 417.55, S&P500 grew 0.94% to 4589.32. A certain volatility was observed in the debt market with the US 10Y yields trading in the range of 1.75% to 1.82% throughout the sessions, ending the day down around 3bps, at 1.77% levels.

Inflation in the Eurozone in January hit historic highs again. Prices rose to 5.1% (y/y) in January after rising 5% in December. The market however expected growth of 4.4% and none of the 44 analysts polled by Bloomberg predicted an acceleration in inflation. Prices accelerated due to higher energy prices (+28.6% (y/y)) and rising prices for food, tobacco and alcohol (+3.6% (y/y)).Today a focus in Europe will be on the meetings of the ECB and the Bank of England. Some opinions show that the ECB will keep its position unchanged while the Bank of England raises the rate by 25 basis points to 0.50%. Considering that several countries of the Eurozone reports indicating an increase of inflation in January. However, European bond rates rose, with the 2-year German bond rate up 1bp. to -0.47%, which is already higher than the ECB’s minimum deposit rate of -0.50%.

According to the Bank of Russia, in December, the net outflow of non-residents’ funds from OFZ increased and amounted to 140 billion rubles, compared to an outflow of 106 and 55 billion rubles two months earlier. The share of non-residents in the OFZ market fell below 20% as of January 1, to 19.9% vs. 20.5% as of December 1 and 23.3% as of January 1, 2021. For the third month in a row, the negative dynamics of the activity of non-residents in OFZ prevailed. Expectations of the tightening of the monetary policy by the Bank of Russia also increased at the subsequent meeting, and at the end of last year the “Ukrainian story” was already beginning, to which non-residents, as a result, reacted quite nervously. In fact, the local government debt market will have to “bring in the negative” in January, for the same reasons. But at the moment RUB feels pretty good, outperformed the EM crowd on Wednesday, rising 1.1% to 76.06 versus the US dollar. Trading volumes increased, with the MOEX reporting a total USDRUB turnover of USD 3.7bn. RU 10YT fell at 6bp to 9.37%.

Yesterday in Asia shares were mixed. Markets in China remained closed for Lunar New Year holidays. Tokyo’s Nikkei 225 index NIK,  lost 1.06% while Sydney’s S&P/ASX 200 XJO, was -0.14%  Seoul’s Kospi 180721,jumped +1.67%, catching up on earlier gains elsewhere after markets in South Korea reopened from holidays. Singapore’s benchmark  STI also gained 1.76%.

Meanwhile, in Brazil, the country’s central bank is planning to raise its base interest rate above 10% for the first time in almost five years and may signal further tightening of interest rate policy.Most analysts expect the central bank to raise Selic for the third consecutive 150 basis points to 10.75%. It will be Brazil’s first rate decision in 2022, following hikes last year that amounted to a whopping 725 basis points, the highest among major central banks.There are concerns about inflationary pressures in Mexico, where Banxico expects inflation to hit 4% by the end of 2022 and reach 3% in mid-2023. Central bank added that core inflation is expected to peak in February or March. But for now, inflation in services, excluding housing and education, has increased at an annualized rate of about 6%, which is very worrying.