Global markets were lower overnight, as US Markets (S&P 500 Index -2.8%) fell sharply as earnings announcements saw the market hit fresh 2022 lows (down -13% year to date).
The US tech index NASDAQ was down sharply -3.95%, entering into a bear market and sitting 23% off its all-time highs. Big cap tech stocks were not immune from the sell-off. Alphabet reported rare earnings miss after hours, with the stock down another -5% after hours, citing halting activity in Russian and weaker growth from Europe region since the onset of the invasion which weighed down on the result.
Tesla shares were sold off heavily down -12.2% after Elon Musk’s Twitter takeover was approved. Investors appear worried the CEO would be distracted, and that the purchase would require Elon to sell down a significant portion of his Tesla shares.
The mega-cap’s (Trillion dollar plus companies) have been fairly resilient throughout the year, padding heavier losses across most market (particularity the expensive high growth mid-large-cap tech stocks) so far but are now starting to experience some weakness. We anticipate further volatility over the next few months, as rising rates, inflation, China lockdowns, and Ukrainian conflict are all weighing down on weaker global economic outlook – coupled with companies releasing weaker guidance given a high level of uncertainty.
European markets (Stoxx 600 index -0.9%) were down giving up earlier gains, as tech stocks sold off heavily following Wall street’s lead.
Microsoft (MFST:NASDAQ)
Microsoft shares have bucked the losing trend and are currently up ~5% in after-hours trade, recovering from its overnight losses after reporting an earnings beat across the board. Revenue came in at $49.36 billion, up +18% from last year and beat expectations pf $49.05 billion (its smallest revenue beat since 2018). Microsoft’s cloud service business was the standout with revenue jumping +46% from last year, and plans to complete its $69 billion Activision Blizzard acquisition in the current quarter.
Earnings came in at $2.22 per share, beating market expectations by $0.03 per share.
We are BUY rated on Microsoft as quality and highly profitable tech company with plenty of stable growth ahead.
Australia & New Zealand Market Movers
The Australian market was down heavily yesterday (ASX200 index -2.1%) in a day with broad-based sell with all sectors trading lower.
Heavy losses from its recently better performing sectors – Material (-5.1%) and Energy (-4%) weighed down on the market both down due to jitters regarding China’s economic growth amidst their strict lockdowns with the current covid outbreak reaching Beijing.
Nufarm was one of a few stocks which were in the green, rising +1.9% calming investors that their exposure to Ukraine and Russia only represent 2% of their total business.
The New Zealand market fell on Monday (NZX 50 index, -0.8%), in a broad-based sell off.
Pushpay ended the day up +24%, after announcing third parties were looking to acquire the company. Vulcan Steel was another standout up +3.6% after upgrading its earnings guidance for the third time since November.
3 Things Markets will be Watching this Week
- Geopolitical risks remain elevated with the Russia/Ukraine conflict.
- US first quarter GDP data and a huge week of earnings in the US with Alphabet, Meta, Apple, Ford, Amazon, Chevron and Exxon Mobil all due to report.
- Locally, Australian CPI (inflation) data trading updates from Australian Oil and Gas producers.