Early Morning Call: currency market little changed ahead of Fed rate decision tonight

Indices overview

European indices opened higher on Wednesday, following the lead of US and APAC equity markets.

In China, Caixin factory activity continued to shrink in January, although more slowly, according to the Caixin survey. China's Caixin/S&P Global manufacturing purchasing managers' index (PMI) rose to 49.2 in January from 49 in December, staying below the 50 mark for a sixth straight month. This is a contrast with Official NBS data earlier this week, that showed factory actvity's return to growth.

Forex

There is very little movement on the currency market this morning. The dollar is broadly flat as investors await the conclusion of a Federal Reserve (Fed) policy meeting. The US central bank is expected to raise interest rates by 25 basis points later today, to a range of 4.5% to 4.75%.

Also expected today, Eurozone consumer price index is expected to rise 9% year-on-year (YoY).

In the US, ADP employment change is expected at 1.15pm. The private sector is expected to have created 170,000 jobs in January. ISM manufacturing PMI is forecast to fall to 48 in January, after 48.4 the previous month, and JOLTs job openings are expected to fall to 10.23 million in December.

Equities

On the equity market, Vodafone reported a slowdown in its group service revenue growth to 1.8% in the third quarter (Q3) from 2.5% in the second, driven by declines in continental Europe.

GlaxoSmithKline posted higher-than-expected Q4 profit and sales and forecast a 6% to 8% rise in sales for 2023 and a 10% to 12% increase in operating profit.

And Swiss pharma group Novartis expects that core operating income will grow in a "mid-single digit" percentage range in 2023, following stagnation last year.

In the US, Advanced Micro Devices shares rose in extended trading, after posting marginally better-than-expected earnings and revenue for the fourth quarter and expressing confidence in the outlook for 2023. The chip maker earned 69 cents per share. Adjusted fourth-quarter revenue rose 16% to $5.60 billion.

AMD's data centre segment revenue grew 42% to $1.7 billion, offsetting a 51% drop in revenue of the client segment. AMD CEO Lisa Su said she was confident AMD would keep gaining market share this year, adding that the second half of the year would be stronger than the first.

The company forecasts a current quarter revenue of $5.3 billion, plus or minus $300 million. Analysts on average expected revenue of $5.48 billion, according to Refinitiv.

Snap shares tanked as much as 14% in extended trading last night, after the owner of the photo messaging app SnapChat warned that the headwinds the company faced over the past year would persist throughout the current quarter. Revenue for the fourth quarter ended December 31 was $1.3 billion, flat from the prior year and in line with analyst expectations.

Snap posted a net loss was $288 million, versus net income of $23 million the previous year. On an adjusted basis, it reported earnings of 14 cents per share, beating Wall Street estimates of 11 cents. In a letter to investors, Snap said it suffered from a weakening economy, and increased competition from other social media platforms, adding that current quarter revenue could decline by as much as 10%.

Tonight, after the US closing bell, Meta Platforms, the parent company of Facebook, is expected to post earnings of $2.26 per share, which would correspond to a 40% decline on Q4 2021. Revenue is likely to decline by 6% to $31.53bn. Meta lost roughly two-thirds of its value last year, leading the group to part with 13% of its workforce.