*ECB President Christine Lagarde declined to rule out a rate increase in 2022 and acknowledged that inflation risks for the eurozone are “tilted to the upside,” signaling that policy makers were likely to offer more detailed guidance when they meet in March. Lagarde had previously pushed back on market expectations for a rate increase this year.*
*Europe’s policy update came after the Bank of England raised its key interest rate from 0.25% to 0.5%, justifying the move by citing rising inflation and the tight conditions of the U.K. labor market. Its interest-rate increase was the first back-to-back hike for the BOE since 2004.*
*In Europe, the Bank of England hiked its key rate and signaled it would start running down bond holdings. Meanwhile, the ECB held its interest rates and said net buying under its emergency support program will end in March.*
*Lagarde said inflation would remain elevated for longer but the bank was getting “much closer” to its inflation target. Germany’s two-year yield rose to a 2015 high. The Stoxx Europe 600 fell below its 100-day moving average.*
*Meanwhile, a barometer of U.S. business conditions at service sector companies such as restaurants and retailers touched the lowest level since February 2021. The Institute for Supply Management’s index of service companies that employ most Americans slid 2.4 points in January to a 11-month low of 59.9%, ISM said Thursday, during a record coronavirus outbreak that sapped the economy.*
As markets focus closely on large, developed-market monetary policy stances -- and investor sentiment around the globe shifts -- economic activity data releases will be key
*Growth in the U.S. services sector pulled back in January to the slowest pace in nearly a year. Meanwhile, U.S. initial jobless claims fell more than expected last week to 238,000 ahead of data on payrolls Friday.*
*In other economic reports, U.S. jobless claims dropped 23,000 to 238,000 on the week as omicron receded, data show. Meanwhile, unit labor costs rose at a 0.3% rate in the fourth quarter of 2021, data show.*
*Tomorrow’s jobs report is a reminder that expectations for Fed policy are the key influence on this market right now, and if economic data, especially inflation data, comes in ‘too hot’ then that will rekindle hawkish Fed concerns like in January, and we would expect at least a partial return of the January volatility Bottom line, Fed policy still very much matters to this market.*
The CBOE volatility index (.VIX), Wall Street's fear gauge, moved up after hitting a near three-week low in the previous session
*Volume on U.S. exchanges was 10.85 billion shares, compared with the 12.37 billion average for the full session over the last 20 trading days.*
*Which companies were in focus?*
• *Snapchat* parent Snap Inc. and Pinterest both saw pressure after the Meta Platforms results, with both companies set to report results after the close. Shares of Snap were down 23.6%, and those for Pinterest fell 10.3%.
• *Spotify Technology* also was reeled after issuing a light subscription forecast. Its stock was down 16.8%.
• *GameStop Inc.* -0.81% gave back early gains to close down 0.8% after disclosing it had entered into a partnership for its long awaited NFT platform.
• *Honeywell’s shares fell 7.6%* after the company beat narrowly on profit but fell short on revenue and provided lower-than-expected guidance.
• *T-Mobile US Inc advanced 10.2%* after posting both positive numbers and outlook
• Swedish bearing and seal manufacturer *SKF fell over 9%* after its fourth-quarter earnings report and announcement of a new strategic framework.
• *Shell* posted a sharp upswing in full-year profit, with adjusted earnings of $19.29 billion, beating analyst expectations on rebounding commodity prices. Shares of the British oil major were slightly higher.
The Nikkei 225 NIK NIK closed down 1.1% and Korea’s Kospi Index 180721, +1.67% rose 1.7%. Markets in China and in other parts of Asia are closed for Lunar New Year.
By: via @AlliesFin Serve Stock Market
