Gold surges to a record high

The US dollar

While Jerome Powell confirmed the US economy appears nowhere near the point of falling into recession, the Fed Chairman noted it remains unclear when the central bank may cut interest rates and underpin the current expansion given further progress on inflation is not assured. Powell told members of the House Financial Services Committee that the Fed was on a "good path" to achieve its hoped-for soft landing. The USD fell to a one-month low, and gold rose to a record high.

European Central Bank

Last week, European Central Bank (ECB) President Christine Lagarde suggested that while slowing inflation would persist, there was more evidence needed before price increases would return to the 2% ECB inflation target rate. At 1.15 p.m., the bank is expected to keep its main refinancing rate unchanged at 4.5%. The deposit facility rate and marginal lending rate are also forecast to stay unchanged, at 4% and 4.75%, respectively. Recent inflation data last week showed inflation fell in major European economies—France, Germany, and Spain—while the Eurozone's preliminary inflation data for February dropped to 2.6% from 3.8% the previous month.

Australia's trade surplus

Australia's trade surplus increased to A$11.03 billion in January from a downwardly revised A$10.74 billion in December 2023, but missed market forecasts of A$11.5 billion. Exports rose faster than imports. Shipments grew by 1.6% from a month earlier. Note that shipments to China plunged by 9.2%. Meanwhile, imports climbed 1.3%. In China, the trade surplus widened to $125.16 billion in January-February as exports grew by 7.1%, beating forecasts of 1.9% growth, while imports climbed only by 3.5%.

The Halifax house price index

The Halifax house price index rose by 0.4% in February month-over-month (MoM) and by 1.2% on an annual basis.

Aviva

Elsewhere on the equity market, Aviva reported a 9% rise in operating profit and announced a share buyback of £300 million. ITV’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITA) dropped 32% to £489 million, as total revenue fell by 2%.

Lufthansa

German airline Lufthansa has reported finacial year (FY) numbers. It saw an operating profit of 2.7 billion euros for 2023, as expected, but costly labour disputes have seen its operating margins for 2024 drop to 7.6% from a goal of 8%. The impact of strikes and a drop in logistics profits will lead to a higher expected operating loss in the first quarter than in earlier years, offsetting strong post-COVID travel demand.

Gap

Over in the US, Gap is due to report tonight after market close. The street anticipates the group to post quarterly earnings of 20 cents per share, which would be a year-over-year increase of 126.7%. Revenues are expected to decrease by 0.7% year-over-year (YoY) to $4.21 billion.

Analysts' sales expectations match the group's own forecast. Three months ago, a gap predicted a muted holiday season, which would translate into flat or slightly down sales. Three months ago, you may remember that the stock jumped 30% on better-than-expected top and bottom lines, mainly due to the solid performance of its old navy brand. In Q4 again, Gap is expected to have relied on old navy sales. It is the only business in the Gap portfolio to have been able to keep its store count stable.

Costco Wholesale

Costco Wholesale is expected to report before the market opens. Analysts see earnings of $3.62 per share as compared with $3.30 a year ago. Revenue should reach $59.11 billion, a noticeable improvement on the $54.24 billion recorded a year ago. Another metric that investors particularly look at is traffic, or the number of customers that enter the group's warehouses. Three months ago, Costco sales rose 3.8%, a performance due to a 4.7% increase in the number of customers, compensating for a 0.9% decline in average transaction size.

Broadcom

Also due after market close: Broadcom. The semiconductor company is expected to post earnings of $10.4 per share, compared to $10.33 a year ago. Revenue is expected to leap to $11.79 billion from just under $9 billion a year ago. Three months ago, Broadcom's quarterly revenue beat forecasts, boosted by investment in network connectivity for artificial intelligence. Like many stocks, Broadcom benefits from the current AI euphoria.

Crude oil

Crude inventories rose for the sixth week in a row by 1.4 million barrels, according to the Environmental Impact Assessment (EIA). It is lower than what analysts had forecast, as refining rates picked up sharply. Refinery utilisation rates jumped by 3.4 percentage points to 84.9% of total capacity. Gasoline stocks fell by 4.5 million barrels, while distillate stockpiles fell by 4.1 million barrels.