- US futures rise as upbeat reaction to tech earnings takes effect
- Meta announces first dividend
- Amazon beats forecasts
- Apple results better than expected
- Oil set for weekly loss on signs of reducing geopolitical tension
Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown:
“The FTSE 100’s expected to end the week higher after a flurry of results from across the pond last night, which set a rather positive scene.
The market was hit by a wave of tech earnings on Thursday night, and it seems these huge names are still carrying the market on its back. The Dow Jones Industrial Average rose 1.0% while both the S&P 500 and the Nasdaq Composite climbed 1.3%. Meta has seen a remarkable share price jump, as it announced its first ever quarterly dividend and a hefty share buyback. The topping of estimates also came as a very welcome surprise – the advertising revenue landscape remains very lumpy and Meta’s navigating this well. The potency of its offering is clear to see, with advertising impressions rising by a fifth, and price increases are tapering to more customer-friendly levels. The returning of cash to shareholders is a bold and well-regarded move. The amount of free cash pumping through the business means it’s more than able to afford it, and it helps pay investors for their patience as Meta works out the next generation of growth and all the Metaverse entails.
It was also a good night for Amazon, which took a gamble when it hired swathes of extra seasonal workers over Christmas. Retail margins have been squashed in the past when demand failed to show up following over-zealous capacity ramp ups. The world’s largest retailer comfortably beat analyst expectations with quarterly revenue of $170bn. The record period shows there’s still plenty of consumer strength rattling through economies, and Amazon will be hoping to capitalise on that through new AI shopping assistant tools. One area to keep focus on is AWS. AWS is a phenomenal product, and the value isn’t fairly captured by Amazon’s market cap. The rate of growth has come off the boil slightly as businesses trim spending, but this should reverse in the fullness of time – leaving Amazon in an enviable position.
Apple was the rotten name in the barrel on Thursday, with a disappointing reading from sales in China. While analyst forecasts have been beaten, revenue growth of 2% is not quite juicy enough. But, credit where it’s due, the 2% revenue growth breaks a streak of four straight quarters of annual revenue declines, and the all-important Services revenue reached an all-time high. Looking ahead, the newly launched Apple Vision Pro headset has a lot resting on it in terms of convincing investors that Apple’s able to meaningfully engage with the AI revolution.
Brent crude’s set to lose around 5% this week, with the price hovering at about $79 a barrel. There are signs that tension in the Middle East are loosening, which has eased some supply concerns. This is a highly dynamic situation though, meaning things could change at short notice.”
