Early Morning Call: GBP falls as UK consumer confidence and retail sales unexpectedly drop

Indices overview

European indices are poised to post their first weekly losses this year, after having set new highs. There were new multi-month highs for DAX and CAC, and four-and-a-half year high for the FTSE 100.

Indices ended the session higher in the APAC region. In Japan, headline CPI rose 4% in December year-on-year (YoY) after a 3.8% rise in November. Core consumer prices in December rose 4% YoY, double the central bank's 2% target and hitting a fresh 41-year high.

Analysts are divided on whether the Bank of Japan (BoJ) could raise rates this year. A Reuters poll published yesterday revealed that more than half of big Japanese firms planned to raise wages this year. But the vast majority of Japanese workers are employed by smaller firms which are less able to afford pay raises.

If the BoJ considers that the pace of wage hikes is insufficient, it could keep its policy on rates unchanged.

In China, the People's Bank of China (PBoC) kept its benchmark lending rates unchanged for a fifth straight month. The one-year loan prime rate (LPR), on which most new and outstanding loans are based, was left at 3.65%. The five-year LPR, the reference rate for mortgages, was held at 4.3%.

In the UK, British consumer sentiment fell for the first time in three months in January. Gfk consumer confidence declined three points to -45, the third lowest reading since records started in 1974. Economists forecast a rise to -40 from December's -42.

The survey results highlight rising energy and food prices, economic uncertainty, and the impact these are having on UK households.

UK retail sales unexpectedly fell by 1% in December monht-on-month (MoM), following an upwardly revised 0.5% drop the previous month. Economists expected a 0.5% rise. Year-on-year, retail sales fell for a ninth straight month by 5.8%.

Earnings

Netflix earnings missed expectations by quite a margin. The company posted earnings of 12 cents per share, when analysts expected 59 cents. Revenues were broadly in line at $7.85 billion.

But as ever, the market was a lot more interested in the group's subscribers. Netflix said it added 7.66 million subscribers in the fourth quarter (Q4), beating Wall Street forecasts of 4.57 million. You'll be pleased to know that "Harry & Meghan" played a part in that performance. Netflix shares rose as much as 6.1%.

Besides earnings, Netflix announced that its co-founder Reed Hastings is stepping down as chief executive, handing the reins to co-CEO Ted Sarandos and chief operating officer Greg Peters.

Today, before the US market open, oil services company Schlumberger is due to publish its earnings for the fourth quarter. Analysts expect earnings of 68 cents on revenue of $7.78bn.

Genesis Global Holdco LLC, parent company of crypto lender Genesis Global Capital, filed for Chapter 11 bankruptcy protection just a few hours ago.

Commodities

Oil prices bounced back yesterday afternoon, sending WTI back above $80.

Yesterday afternoon, the EIA confirmed the latest crude oil stock rise announced on Tuesday by the API. Crude oil inventories increased by 8.4 million barrels last week.

Gasoline stockpiles also rose, by 3.5 million barrels, while distillate inventories fell by 1.9 million barrels.

Last week, Baker Hughes total rig count rose by three to 775. The number of oil rigs in operations increased by five to 623.