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China Central Bank Makes Moves While the ECB Meets Today

Miguel A. Rodriguez
Miguel A. Rodriguez
25 January 2024

Stay updated with the current pulse of the markets as we witness a continued bullish trend in stocks, Netflix surpassing earnings expectations, and Tesla falling short. Additionally, today's ECB meeting and the recent pivotal changes by China's Central Bank are reshaping the financial landscape. Read on for more. 

Stock Market Holds Strong as Quarterly Earnings Impress for Some

The stock market began the session yesterday continuing the bullish momentum of previous days. This impulse was motivated by several reasons.

First, thanks to Netflix's strong numbers after Tuesday's close, the streaming giant added far more paying subscribers in the fourth quarter than Wall Street expected.

Netflix (NFLX) shares saw an impressive rise of more than 12% after the company reported a total of 13.12 million users during the last quarter of the year, an increase of 71% compared to the same period of the previous year and notably above analyst estimates of around 8.9 million. Revenue grew around 12% year-over-year to $8.83 billion, also exceeding projections.

Netflix executives confirmed a good pace of business growth and forecast double-digit annual growth in gross revenue. 

Gráfico, Gráfico de líneas

Descripción generada automáticamente

Netflix daily chart, January 24, 2024. Source: CAPEX.com WebTrader.       

Additionally, mega-capitalized Meta Platforms Inc. (META) hit a new record, pushing its market value to $1 trillion for the first time since 2021.

Today, the quarterly earnings of two other important companies Visa and Intel will be announced. 

Upcoming Earnings Watch: 

 

China Central Bank Impose Adjusted RRRs Boosting the Hang Seng Index

In the Asian market, the Chinese Central Bank announced that it will reduce the required reserve ratio (RRR) for banks within two weeks and hinted that more support measures will be implemented in the future. The unexpected announcement shows a clear intention of the government to implement economic measures that provide support to the economy and stop the continual decline in the stock market since January of last year.

The RRR, which determines the amount of cash banks must keep in its reserve, will be reduced by 0.5 points and will provide 1 trillion yuan of long-term liquidity to the market.

Following the news, the Chinese Hang Seng Index rose more than 3%, which had a positive effect on global market sentiment. It's important to understand that economic and market changes within the Asian region directly affect the global economy.

EV Maker Tesla Disappoints in Recent Earnings

At the close of yesterday’s session, the earnings for the last quarter of the automobile company Tesla were announced, which did not reach the estimated levels.

Tesla (TSLA) reported adjusted EPS of $0.71 on revenue of $25.17 billion, missing Wall Street estimates of $0.73 and $25.61 billion, respectively. The company's margins took a hit from recent price cuts amid a weaker backdrop for demand for electric vehicles.

Tesla stock fell as much as 4% after the market closed and stock index futures were dragged lower, erasing all of the day's gains.

European Central Bank Kicks Off First 2024 Meeting Today

In terms of economic events, today is an important day as the ECB's first meeting of the year will take place. Even though it's very likely that interest rates won't change, comments from Lagarde at the press conference and details from the meeting report could hint at future decisions. Initially, the ECB president mentioned that rate cuts might start being considered in June, but this could change. If rate cuts begin sooner than expected, the markets would take it as good news. 

Key Takeaways

  • The stock market is holding strong with continued bullish momentum.
  • Netflix shocked investors with a stellar quarterly earnings report boosting its stock more than 12%.
  • Meta, previous Facebook, broke the $1T  ceiling for the first time since 2021.
  • EV pioneer Tesla fell through with less than expected earnings yesterday.
  • China Central Bank enforces new RRR.
  • The Chinese Hang Seng Index rose more than 3% in response.
  • ECB conference convenes today, investors and traders alike wait to hear statements and see how the market will react. 

 

Sources: Bloomberg, Reuters

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Miguel A. Rodriguez
Miguel A. Rodriguez
financial_writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.