Quarterly results on Tuesday brought mixed feelings across the market, especially in the financial sector. Tom Barkin, Richmond’s Fed president and CEO expressed hopes that US is behind the worst inflation.
Goldman Sachs Group fell 6.45% after its fourth-quarter results fell short of expectations. This was due to rising costs, a weakening consumer banking business, and a massive drop in revenues from investment banking.
Morgan Stanley, on the other hand, went up almost 6% after reporting better-than-expected results for the fourth quarter. Morgan Stanley reported record earnings in its wealth management business, which made up for investment banking weakening.
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The S&P 500 fell by 0.22% with the Dow Jones, which fell by 1.15%. The Nasdaq Composite was able to close in the green, up by 0.14%, mostly due to big tech pulling it ahead.
Microsoft and Apple both closed a healthy gain of 0.47% and 0.88% respectively. Tesla’s stock gained the most after Deutsche Bank “strongly” reaffirmed its “buy” rating on the company. This is because Deutsche Bank thinks that Tesla’s recent price cuts will likely help the electric car maker’s sales growth. The rally closed Tesla up 7.43%.
US dollar was unable to get back on its feet
The US dollar stayed weak on Tuesday, with no major gains versus all of its big competitors. The euro did the worst against the greenback, while the British Pound did the best.
EUR/USD fell to 1.0791 losing 0.22% as market talk suggested that European Central Bank (ECB) officials might be thinking about slowing the rate of tightening. There are rumors that President Christine Lagarde and her team will choose to raise rates by 50 basis points (bps) in February and then 25 bps each meeting after that.
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GBP/USD came close to 1.2300 gaining 0.88% after data about jobs in the UK hinted at a fairly tight labor market. Therefore the Bank of England could raise the benchmark rate and keep it there for a longer time. On Wednesday, the UK will announce the inflation rate for December.
Hopes on China’s demand boost commodities
On Tuesday, oil prices ended up in the green after a fairly choppy session. China’s reported annual economic growth numbers were weak, but they were better than expected. Traders are betting on demand boosts as Covid policies are cleared.
Brent crude futures shot up $2.13, or 2.5%, closing at $86.59, while US West Texas Intermediate crude futures settled up above $81, gaining 1.4%.
Copper also utilised China’s data to gain 0.46%. The other shiny metals, silver and gold futures, however closed the day in the red, losing 1.25% and 0.56% respectively. Gold is nearing the crucial $1,900 mark at $1,910, even though the US dollar is not the strongest.