Financial Markets’ Weekly Recap, January 16-20

New Zealand’s prime minister, Jacinda Ardern, has said she is resigning, in an unexpected announcement that came as she confirmed a national election for October.

At the party’s first caucus meeting of the year on Thursday, Ardern said she “no longer had enough in the tank” to do the job. “It’s time,” she added.

“I’m leaving, because with such a privileged role comes responsibility – the responsibility to know when you are the right person to lead and also when you are not. I know what this job takes. And I know that I no longer have enough in the tank to do it justice. It’s that simple,” she said.

Her term as prime minister will conclude no later than 7 February but she will continue as an MP until the election this year.

Jacinda Ardern gives out a hug in March 2019 after the Christchurch mosque attacks. The New Zealand prime minister’s response to the killings was a defining moment in her premiership.
The key moments of Jacinda Ardern’s time as prime minister

“I am human, politicians are human. We give all that we can for as long as we can. And then it’s time. And for me, it’s time,” she said.

Ardern said she had reflected over the summer break on whether she had the energy to continue in the role, and had concluded she did not.

Radio New Zealand reported that the ruling Labor Party had chosen Chris Hipkins to replace Jacinda Ardern as Labor leader and prime minister at a meeting on Sunday.

Hipkins, 44, was the only candidate for the post and his endorsement by Labor MPs was largely a formality.

Hepkins is expected to hold a press conference shortly after to formally announce the decision.

US stocks rose at the close on Friday, as the Standard & Poor’s 500 and Dow Jones indexes snapped a three-session losing streak, and the Nasdaq index rose more than 2 percent, after quarterly earnings helped Netflix shares rise, while Alphabet shares, which owns Google, rose after the announcement. job cuts.

Netflix stock jumped after the streaming company said it added more subscribers than expected in the fourth quarter and said its co-founder Reed Hastings was stepping down as chief executive.

Alphabet was the latest major company to announce job cuts, saying it would cut 12,000 jobs, sending its shares surging.

Forex

The dollar rose against the yen on Friday, heading for its biggest daily gain in nearly two weeks, after the Bank of Japan’s governor reaffirmed that the bank would maintain its ultra-loose monetary policy amid speculation of an imminent policy shift.

Bank of Japan Governor Haruhiko Kuroda, who addressed the World Economic Forum in Davos, Switzerland on Friday, said the bank will continue its monetary policy to achieve the 2 percent inflation target in a stable and sustainable manner.

Speculators are betting that the Bank of Japan, the last major central bank still to use easy monetary policy, is moving towards a more hawkish stance, which has led to the yen’s recent rally.

The dollar rose to 130.60 yen, and in the latest transactions it was trading up 1.1 percent at 129.86 yen. The greenback is on track to achieve its biggest percentage point gain since early January.

During the week, the dollar rose 1.6 percent against the yen, heading for its best weekly performance since early December.

The dollar index, which measures the greenback’s performance against six major currencies, rose 0.2 percent to 102.2.

The US currency has lost about 1.3 percent so far in January, after falling about eight percent in the last three months of 2022, when investors began to absorb increasing chances of lowering the pace of US interest rate hikes.

The euro rose 0.1 percent to $1.0843, while the pound sterling settled at $1.2392, after British data showed a sudden drop in retail sales in December.

Europe

European stocks closed higher on Friday, but recorded weekly losses, amid investors’ anticipation of the season of corporate results and the decisions that central banks will take in the coming period, but the reopening of the Chinese economy after a period of closure due to Covid-19 mitigated the losses.

The European Stoxx 600 index rose 0.4 percent at the close, supported by the rise in the shares of the travel and entertainment sector and the retail sector.

Spanish company Cellex jumped 9.8 percent after media reports that American Tower and Brookfield were considering bids to acquire the mobile tower operator.

Despite Friday’s gains, the Stoxx 600 index incurred a weekly loss of 0.1 percent after hitting a nine-month high earlier this week.

Shares of LVMH and Hermes International rose by 0.8 each.

The US central bank is expected to raise interest rates by 25 basis points at its policy committee meeting in February. Expectations also indicate that the European Central Bank will raise interest rates by 50 basis points.

China said the worst was over in its battle against COVID-19, ahead of what was expected to be one of its busiest travel days in years on Friday, while stoking fears of a further surge in infections.

Oil

Oil prices rose about 1 percent when settling on Friday, and recorded gains for the second week in a row, supported by an optimistic economic outlook for China, which boosted expectations of increasing demand in the second largest economy in the world.

The International Energy Agency said on Wednesday that lifting restrictions imposed to curb the spread of Covid-19 in China will lead to an increase in global demand to a record level this year, a day after the Organization of the Petroleum Exporting Countries (OPEC) expected a recovery in Chinese demand in 2023.

Brent crude rose $1.47, equivalent to 1.7 percent at settlement, to $87.63 a barrel. US crude prices rose 98 cents, or 1.2 percent, to settle at $81.31 a barrel.

During the week, Brent crude recorded gains of 2.8 percent, and the US benchmark, 1.8 percent.

Oil prices also received support from hopes that the US central bank will soon shift to raising interest rates at lower rates, which may enhance the US economic outlook.

Most economists polled by Reuters believe the Fed will end its monetary tightening cycle after raising 25 basis points at each of its next two policy meetings, then will likely keep interest rates steady for at least the rest of the year.

Oil prices rose even though US inventory numbers this week showed an increase in crude stocks by 8.4 million barrels in the week ending January 13 to about 448 million barrels, the highest level since June 2021.

Earnings

Morgan Stanley

Morgan Stanley reported fourth-quarter EPS of $1.31, $0.02 better than the analyst estimate of $1.29. Revenue for the quarter came in at $12.7B versus the consensus estimate of $12.54B.

Morgan Stanley’s stock price closed at $91.66. It is up 19.66% in the last 3 months and down -2.50% in the last 12 months.

Goldman Sachs

Goldman Sachs reported fourth-quarter EPS of $3.32, $2.24 worse than the analyst estimate of $5.56. Revenue for the quarter came in at $10.59B versus the consensus estimate of $10.79B.

Goldman Sachs’s stock price closed at $374.00. It is up 20.33% in the last 3 months and up 5.53% in the last 12 months.

JPMorgan

JPMorgan reported fourth quarter EPS of $3.57, $0.46 better than the analyst estimate of $3.11. Revenue for the quarter came in at $34.5B versus the consensus estimate of $34.17B.

Procter&Gamble

Procter&Gamble reported second-quarter EPS of $1.59, $0.01 better than the analyst estimate of $1.58. Revenue for the quarter came in at $20.8B versus the consensus estimate of $20.67B.

Netflix

Netflix reported fourth quarter EPS of $0.21, $0.38 worse than the analyst estimate of $0.59. Revenue for the quarter came in at $7.85B versus the consensus estimate of $7.84B.

Wells Fargo

Wells Fargo reported fourth quarter EPS of $1.37, $0.10 better than the analyst estimate of $1.27. Revenue for the quarter came in at $19.66B versus the consensus estimate of $19.99B.

Wells Fargo&Co’s stock price closed at $42.83. It is up 0% in the last 3 months and down -26.23% in the last 12 months.