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The US stock indices continued their decline yesterday. Quarterly results fell short of estimates, with increasing negativity that the Federal Reserve will remain hawkish for a long time as the labor market shows little sign of easing. As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.76%, and the S&P 500 Index (US500) fell by 0.76%. The Nasdaq Technology Index (US100) was down by 0.96% on Thursday.

About 190,000 people filed for unemployment claims in the US last week, well below economists' forecast of 214,000. The strong labor market leaves the US Federal Reserve with room to raise rates further.

Fed spokeswoman Lael Brainard said Thursday that the Fed intends to stay the course on tightening monetary policy and will keep rates fairly restrictive for some time to ensure inflation returns to the Central Bank's 2% target.

Netflix (NFLX) reported fourth-quarter results that fell short of net income expectations, but the number of new subscribers exceeded expectations. The company added 7.66 million subscribers, well above the 4.6 million expected. The company's stock jumped by 7% after the report was released in the evening session.

Tesla (TSLA) decreased by 1% yesterday as investors worry that the electric carmaker's quarterly results may not meet expectations amid slowing demand and production disruptions in China.

Norwegian Cruise Line (NCLH) shares are down more than 4%. The cruise company warned that it expects to report net losses for the quarter and a full year.

Stock markets in Europe were mostly down yesterday. Germany's DAX (DE30) decreased by 1.72%, France's CAC 40 (FR40) fell by 1.86%, Spain's IBEX 35 Index (ES35) lost -1.60%, and the British FTSE 100 (UK100) closed down by 1.07%.

ECB head Christine Lagarde said yesterday that the labor market in Europe has never been as vibrant as it is now, and the economic outlook is much more positive. Given the latest Eurozone inflation data, analysts are leaning towards the ECB raising rates by 50 basis points in February and March and then by another 25 basis points in May, after which Europe's central bank will take a pause for a few months.

Consumer sentiment in the UK has fallen to a nearly 50-year low. GfK research shows that fears about the economy and a sharp rise in the cost of living have added pressure to household finances. Energy bills and food prices have risen rapidly in recent months, eating away at households' disposable income. Treasury Secretary Jeremy Hunt and Prime Minister Rishi Sunak cut a two-year household energy scheme that would have kept annual bills at £2,500.

The situation in Ukraine is heating up. According to foreign intelligence, Russia is preparing a new major offensive against Ukraine in the coming weeks. This is the reason the Western allies have become more active in providing weapons, including tanks. Today there will be an important meeting in Ramstein at the NATO base, where it will be decided how much and what weapons to give Ukraine to defend its territories. The front line has largely frozen over the past two months, and neither side has made much progress, despite heavy losses in positional fighting.

Oil prices rose about 1% on Thursday, even as inventories rose. The Energy Information Administration, or EIA, said in its weekly report that US crude inventories rose by 8.408 million barrels for the week. The main trigger for the rise is optimism about China's opening. Oil demand in China is up nearly 1 million BPD from the previous month. The International Energy Agency said Wednesday that global oil demand could reach an all-time high in 2023 as China lifts blockages and restrictions.

Natural gas closed yesterday at June 2021 lows. A warm winter in Europe led to a sharp drop in gas consumption, which at current supply levels puts downward pressure on quotes. But the main weather forecast models, the Global Forecast System (GFS) and the European ECMWF model expect colder short-term temperature forecasts by the last week of January. This could cause a short-term rise in prices.

Asian markets traded yesterday without a single dynamic. Japan's Nikkei 225 (JP225) decreased by 1.44% on Thursday, China's FTSE China A50 (CHA50) added 0.15%, Hong Kong's Hang Seng (HK50) ended the day down by 0.12%, India's NIFTY 50 (IND50) fell by 0.32%, and Australia's S&P/ASXv200v(AU200) ended the day up by 0.57%.

Japan's nationwide core CPI rose from 3.7% to 4.0% year-over-year, a 41-year high. Rising inflation in Japan adds to the likelihood that the central bank will reverse the policy to tighten the cycle in the spring.

• S&P 500 (F) (US500) 3,898.85 −30.01 (−0.76%)
• Dow Jones (US30) 33,044.56 −252.40 (−0.76%)
• DAX (DE40) 14,920.36 −261.44 (−1.72%)
• FTSE 100 (UK100) 7,747.29 −83.41 (−1.07%)
• USD Index 102.07 −0.29 (−0.29%)
   

Important events for today:

• Japan National Core Consumer Price Index at 01:30 (GMT+2);
• US FOMC Member Williams Speaks at 01:35 (GMT+2);
• UK Retail Sales (m/m) at 09:00 (GMT+2);
• World Economic Forum Annual Meetings at 10:00 (GMT+2);
• Switzerland SNB Chairman Jordan Speaks at 10:00 (GMT+2);
• Eurozone ECB President Lagarde Speaks at 12:00 (GMT+2);
• Canada Retail Sales (m/m) at 15:30 (GMT+2);
• US FOMC Member Harker Speaks at 16:00 (GMT+2);
• US Existing Home Sales (m/m) at 17:00 (GMT+2);
• US FOMC Member Waller Speaks at 20:00 (GMT+2).

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