US stocks finished mixed on Thursday after the Fed-induced relief rally. The tech-heavy index, Nasdaq, jumped for the second straight trading day, led by Meta Platforms Inc., with its shares surging 24% amid positive earnings reports and a $40 billion shares buyback. Though a jump in major tech stocks, Apple, Amazon and Alphabet’s shares all fell in after-hours trading due to a miss on earnings expectations. On the other hand, the Dow Jones Industrial Average fell, dragged by Merck after the pharmaceutical company provided weak guidance.
Both Bank of England and the European Central Bank raised interest rates by 50 basis points following Fed’s 25 basis points rate hike, bringing their benchmark rates to 4% and 3%, respectively. Spontaneously, both regional markets priced in a peak in their rate hike cycles, with rates sharply declining and sending the Eurodollar and British pound lower. The move has also pushed the US dollar higher, pressing on broad commodity markets, including metal and energy.
Equity futures point to a mixed open across the APAC region, with ASX futures up 0.34%, Nikkei 225 futures rising 0.47% and Hang Seng Index down 0.73%.Click to enlarge the table
- Tech shares jumped, while energy stocks slumped further in the S&P 500, with 6 out of the 11 sectors finishing higher. The Communication Service sector soared more than 6.7% amid Meta Platforms’ surge. Both technology and consumer discretionary were up about 3%. The energy sector, however, fell 2.5% on a further decline in oil and gas prices. The extreme divergence moves in the US stock sectors suggest that the tech is taking a ride on the policy optimism after the Fed signalled an end of its rate hike cycle, but commodities are pricing in an economic recession as the outlook deteriorated.
- Amazon’s shares tumbled 6% in after-hours trading due to a miss on earnings per share and light guidance in the fourth quarter. The e-Commerce giant reported $0.03 in EPS on $149.2 billion in revenue, while consensus called for $0.15 in EPS and $145.4B in revenue. The core business AWS’s revenue has also missed an expectation, reporting at $21.4 billion vs. an estimated $21.87 billion. The company expects the first quarter revenue to be between $121 billion to $126 billion, or a 4%-8% growth year on year, aligning with analysts’ expectations.
- Alphabet’s shares fell 3.9% in after-hours trading due to a miss on both EPS and revenue estimates in the fourth quarter. The search engine giant’s EPS came to $1.05 vs. the $1.18 estimated, while the revenue is at $76.05 billion vs. the $76.53 billion expected. Both YouTube and Google Cloud revenue also fell short of market expectations.
- Apple’s shares slumped 4% in after-hours trading as the tech giant reported disappointing earnings in the final quarter and booked the largest year-on-year sales decline since 2019. Its earnings per share is at $1.88 vs. the $1.94 estimated, and the revenue came to $117.15 billion vs. the $121.10 billion expected. The iPhone sales revenue for Q4 is $65.78 billion vs. $68.29 billion.
- Gold futures retreated sharply from their 9-month highs as the US dollar rebounded. Gold price faced key resistance of 1,970, the pullback is more like a purely technical correction on an uptrend, with a further support of 1,840.
- Crude oil extended losses as energy’s upside momentum faded on economic growth concerns. The central banks’ policy tweaks are not pointing to brighter economic outlooks, instead, the all-year-long aggressive monetary policy and inflation woes are leading to a downturn, darkening the demand outlook in crude oil further.