Wall Street had the best day since January as Meta Platforms’ strong earnings fueled a tech rally, boosting risk-on sentiment, with Nasdaq jumping 2.4%, Dow up 1.6%, and S&P 5000 rising 2%. Meta’s shares surged 14% to a 14-month high or a 172% rebound from its low in November last year. Amazon’s earnings continued to fuel broad optimism as the e-commerce giant beat expectations for its profit and AWS revenue, up 8% in after-hours trading. The smaller tech companies, including Intel, Pinterest, and Snap, however, did not follow through with the rosy earnings results.
Despite positive company earnings, the economic front painted a gloomy picture. The US GDP grew by 1.1% quarterly, well below an estimated 2%, while the Fed’s closely watched inflation gauge, the PCE data, increased by 4.2%, more than the consensus of 3.7%. High inflation and slowing economic growth may lead the US economy to a stagflation era. The US bond yields jumped amid sticky inflation data, suggesting the Fed is most likely to raise the interest rate in May, pressing on gold prices. The US dollar was higher against the Eurodollar and the Japanese Yen but weakened against most commodity currencies, such as AUD, NZD, and CAD.
Futures are pointing to a strong opening across Asian markets. The ASX 200 futures rose 0.77%, the Hang Seng Index futures were up 0.22%, and Nikkei 225 futures climbed 1.05%.Click to enlarge the table
- All the 11 sectors in the S&P 500 finished higher, with communication services leading gains, up 5.53%, buoyed by Meta’s 14% jump. Other growth sectors, including consumer discretionary and technology, all rose more than 2%. Industrial also had a decent bounce of 2%.
- Amazon’s shares surged 8% after-hour amid better-than-expected earnings. The online retailer reported EPS at $0.31 vs. $0.21 estimated. And its revenue was at 127.4 billion vs. $124.5 billion expected, up 9% year over year. Its core business, AWS’s revenue, grew 16% to $21.35 billion, better than an estimated $21.22 billion, though it decelerated from a 20% increase from the final quarter in 2022.
- Intel’s shares rose 2% in after-hours trading as the company beat expectations in the first quarter earnings. But the chip maker reported the largest quarterly loss in history, with its EPS at -$0.04 vs. -$0.15 expected. The revenue was at $11.7 billion vs. $11.04 billion estimated. Intel recorded a loss of $42.8 billion, down 133% from $8.1 billion a year ago.
- Snap’s shares plunged 18% in after-hours trading due to a terrible revenue miss. The social media reported EPS at $0.01 vs. -$0.01 expected. The revenue was at %989 million, well under an estimated $1.01 billion. Its daily active users were 383 million, which also fell short of the 384 million expected.
- Gold lost steam in the last two days as US bond yields started climbing again. The precious metal moved around the 2,000 mark this week and may continue under pressure due to the re-rampant rates. Near-term support may still be seen at the 50-day moving average of 1,930.
- Cryptocurrencies had another strong session following the tech rally in the last 24 hours, with Bitcoin rising towards the 30,000 – mark again. Crypto markets are running hot again may relate to the recent banking rout, where the First Republic Bank reported a massive drop in deposits following SVB’s collapse. Cryptocurrencies may be seen as a hedging tool during a banking crisis.
ASX and NZX announcements/news:
- Pushpay (NZX: PPH) advises that the revised scheme of arrangement, under which Pegasus Bidco Lit. conditionally agreed to acquire all of the shares in Pushpay, has been approved by shareholders at NZ$1.42per share.
- Bank of Japan policy meeting. It will be the first policy meeting that the new governor, Kazuo Ueda, holds next week. There is no expectation for the Bank of Japan to change its dovish stance on the monetary policy. Ueda gave a clear message to keep BOJ's ultra-loss monetary policy to avoid global financial shocks lately. But bets for the BOJ to loosen its Yield Curve Control (YCC) are strengthening as the bank cannot avoid an exit from the negative interest rates, which will be detrimental to the economy in the long haul.