Early Morning Call: equity markets in Europe open lower in the wake of yesterday's US session

Equity market overview

APAC equity markets were mixed overnight, following a negative session in the US, where indices' performance was dampened by comments from Federal Reserve (Fed) officials indicating that the central bank will not pause rate hikes anytime soon.

In New Zealand, PM Jacinda Ardern has announced she will step down no later than early February, after five-and-a-half years at the helm. A general election will be held on 14 October.

Japan's trade deficit narrowed to ¥1.45 trillion in December, beating market consensus of a ¥1.65 trillion. This was the 17th straight month of a trade shortfall, the longest stretch since 2015. Imports climbed 20.6% while exports grew at a softer 11.5%.

In Australia, the unemployment rate unexpectedly stood at 3.5% in December. Economists expected it to fall to 3.4%. Employment fell by 14,600, the first drop since July, missing forecasts of a rise of 22,500.

Macroeconomic indicators

In the US, a few macroeconomic indicators are set to be published at 1.30pm. Building permits and housing starts for December; January Philly Fed manufacturing index; and initial jobless claims.

Elsewhere on the equity market, Deliveroo said it achieved breakeven in adjusted earnings in the second half (H2) of the year. The group said value of orders increased by 6% during the fourth quarter (Q4).

Online retailer Boohoo said group revenue fell 11% as expected, while its gross margin reached 49.7% in the last four months of 2022.

And Dunelm confirmed its 2023 profit guidance after posting an 18% revenue increase in Q4.

There were also statements from Kier Group, Premier Foods and Sage Group.

In the US, Alcoa shares fell in extended hours yesterday after the aluminium producer posted a larger loss than expected. The group recorded a loss of 70 cents per share, analysts had anticipated a 67 cents loss.

Today, before market open, Procter & Gamble is expected to post a 4.5% decline in earnings, to $1.58 per share. Revenue is also forecast to fall by 1.25% to $20.67 billion.

Tonight, Netflix is forecast to post earnings of 59 cents on revenue of $7,84bn. A slowing economic environment and increased competition from Disney+ and Amazon Prime have constrained subscriber growth. Analysts estimate the company added a relatively modest 4.5 million net paid subscribers last quarter.

Commodities

Oil prices are down in excess of 2% this morning. Yesterday evening, the American Petroleum Institute said crude oil inventories fell by 7.6 million barrels last week.

Gasoline stockpiles rose by 2.8mn barrels, and distillate stocks rose by 1.8mn barrels.

Finally, gold is little changed this morning, trading above $1,900.