Meta Stock Soars after Paying 1st Dividend

Equities

On Thursday, the major US stock indices saw a robust recovery. The S&P 500 advanced by 1.25%, closing the trading session at 4,906.19 points. Similarly, the Nasdaq Composite Index saw a rise of 1.30%, ending at 15,361.64 points, while the Dow Jones Industrial Average increased by 0.97% to 38,519.84 points.

Meta's Q4 earnings beat expectations, leading to a 14% jump in its stock after hours, driven by a 25% revenue boost and cost savings. The firm announced its first ever dividend of 50-cents, with net income soaring to $14 billion. However, its Reality Labs division faced $4.65 billion in losses but this was brushed off amidst the company's strong performance and progress in AI.

Amazon also enjoyed a post-market gain after unveiling its earnings results. Apple however faced a slight downturn in its extended trading session, even though it reported earnings and revenue that surpassed analyst predictions, with the caveat of underperforming sales in China.

The banking sector had a mixed day, with the KBW Regional Banking index falling by 2.3%, significantly impacted by a sharp 11.1% decline in New York Community Bancorp's shares. This was in response to reported difficulties within its commercial real estate portfolio, reigniting concerns over the health of US regional banks. On the other hand, the broader S&P Banking index saw a less severe drop, ending the day down by 1.4%.

The FTSE 100 slightly decreased by 0.1%, influenced by the Bank of England's decision to maintain interest rates at a 16-year peak, necessitating further proof of inflation's decline towards its 2% target before considering rate reductions. Contrastingly, Shell reported a 2.4% increase in its share price, reaching a more than three-week peak after announcing a dividend raise and extended share repurchases, buoyed by its fourth quarter adjusted profit exceeding expectations.

Forex & Commodities

The British pound saw an uplift, gaining 0.46% to $1.27455, influenced by the Bank of England's (BoE) stance, which, while maintaining interest rates at a 16-year peak, indicated a need for more evidence of inflation falling towards its 2% target before considering rate cuts. This position contrasts with the more dovish tones from other central banks, marking the BoE as somewhat of an outlier in the current monetary policy landscape.

The US dollar fell against major currencies, including the euro and yen, amid growing speculation that the Federal Reserve might start reducing interest rates in the near future, despite Chair Jerome Powell's caution against an imminent rate cut in March. Market expectations, however, have shifted, with traders now seeing a 39% chance of a rate cut in March and a 94% likelihood by May.

The upcoming Nonfarm Payrolls report is anticipated to reveal the US added 180,000 jobs in January 2024, a decrease from December's 216,000 jobs. The unemployment rate is expected to slightly increase to 3.8% from December's 3.7%. Average Hourly Earnings are projected to maintain a 4.1% year-over-year growth rate, mirroring December's figures.

In commodities, gold prices were poised for their largest weekly gain in nine weeks as the dollar and Treasury yields weakened, with spot gold rising 0.1% to $2,056.00 per ounce. The anticipation around the US jobs data, expected to add further clarity on the Fed's rate path, alongside concerns over the US regional banking sector, contributed to gold's appeal as a safe-haven asset.

Oil prices, conversely, dropped over 2% following unverified reports of a ceasefire between Israel and Hamas and a power outage leading to the shutdown of a significant US refinery.