Japanese exports

Japan exports rose to a record high in December, which led to an unexpected trade surplus of ·62.1 billion. Economists had anticipated a deficit of $122.1 billion. Exports rose 9.8% year-over-year (YoY), beating a consensus estimate of 9.1%. Shipments to the U.S. surged to their strongest-ever level, rising by 20.4%, led by shipments of cars and auto parts, and marking 27 consecutive months of growth. Exports to China, Japan's biggest trading partner, climbed 9.6%, boosted by shipments of semiconductor manufacturing equipment and cars. Japan's imports fell 6.8%, more than the median estimate for a 5.3% decrease. For the whole of 2023, Japan logged a trade deficit of 9.29 trillion, marking the third consecutive year of a deficit.

Jibun bank manufacturing PMI

Manufacturing and services PMI Flash will be released around the world throughout the day. In Japan, Jibun bank manufacturing PMI remained in contraction territory as expected, while service activity expanded at a faster pace. Apart from service activity in the UK and US, every reading is expected to remain below 50 in January.

The Bank of Canada

At 3 p.m. this afternoon, the Bank of Canada made an interest rate decision. Economists believe the Bank of Canada (BOC) will keep its overnight rate at 5%, leaving borrowing costs at a 22-year high. Headline CP| growth accelerated to 3.4% in December from 3.1% the previous month, which would make it very difficult for the bank to turn dovish. At the same time, the Canadian economy feels the high interest rate. In Q3, gross domestic product (GDP) contracted by 0.3% uarter-on-quarter (QoQ). Economists predict that inflation will eventually return to a target rate of 2% by 2025. In the meantime, inflation is expected to be a bit higher, at around 3.5%, until mid-2024.

EasyJet

Elsewhere on the equity market, easyJet reports a pretax loss of £126 million in Q1. The number of passengers grew by 14%, while the load factor came in at 86%.

ASML

ASML, Europe's biggest tech company, reported better than expected net profit and sales in Q4, helped by booming sales to China. Net profit rose 9% to €2.05 billion on sales of €7.2 billion, beating analyst expectations of a €1.87 billion net profit on revenue of €6.9 billion.

Netflix

Netflixshares jumped in extended trading as investors were surprisingly pleased by the number of new subscribers. The company said it added 13.1 million subscribers in the December quarter, its largest-ever fourth-quarter subscriber growth, handily exceeding projected gains of 8.97 million. That brings the total number of subscribers to 260 million.

Earnings per share of $2.21 fell short of estimates, while revenue rose to $8.83 billion, topping forecasts and the company's own guidance of $8.71 billion.

AT&T

AT&T is forecast to post earnings of 56 cents per share on revenue of $31.47 billion. In the past few days, AT&T has made the news longside Alphabet's Google and Google. The three groups have announced a strategic investment in AST SpaceMobile, a company that is building the first space-based cellular broadband network accessible directly by everyday smartphones.

Tesla

Tesla will update the market with its report for the fourth quarter after the US closing bell tonight. Analysts anticipate earnings of 72 cents per share. Revenue is seen at $25.52 billion. Once again, one key metric for investors is margins. Throughout the year, Tesla has been cutting its vehicle prices, focusing, as Elon Musk pledged about 12 months ago, on sales rather than margins. Automotive gross margins topped Q1 at 30%. They were down 16.3% in Q3 and are likely to slip again. Tesla should also communicate its guidance for 2024.

IBM

Also due on Wednesday evening is IBM. The group is expected to post quarterly earnings of $3.77 per share, up 4.2% YoY. Revenue is also forecast to rise by about 3% to $17.23 billion. Up to now, Al has made a very modest contribution to IBM revenue. Even though it is still early days, the markets want to know more about IBM's plans, especially how it will differentiate itself from its competitors.