Global markets were lower on Friday with Wall Street’s major indices falling as weaker than expected earnings reports from major technology companies led to a big drop for the tech sector.
Facebook shares continued to fall post their large drop in the previous session, while shares in Twitter also plummeted on the back of their quarterly result, hitting sentiment across tech stocks which have been the market leaders for some time now. Amazon shares were the exception, which we discuss below.
For the week ahead, local earnings season across Australia & NZ kicks off this week, with the likes of mining giant Rio Tinto set to release its profit figure mid-week. Also in focus this week will be the US Federal Reserve, with the latest interest rate decision to be made on Thursday morning (AU/NZ time).
Stock in Focus: Amazon (AMZN:Nasdaq)
While most of the US tech sector suffered heavy losses on Friday, shares in Amazon managed to reman in positive territory after releasing another record result.
The company continues to defy gravity and Amazon forecasts strong fall sales and posted a profit that was double Wall Street targets thanks to the retailer’s younger, higher-earning businesses, including cloud computing and advertising. The report comes in contrast to the likes of Facebook and Twitter which are raising concerns that the US tech sector bull run may be coming to an end. Looking at the numbers, Amazon said it expects an operating profit between $1.4 billion and $2.4 billion, up from $347 million a year earlier. The company also reported a second-quarter profit of $2.5 billion, its largest ever.
We currently have a HOLD rating on Amazon.
Members should look out for a full update on Amazon to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market moved higher on Friday (ASX 200 index +0.89%) as gains were broad based with the market hitting a fresh 10-year high. In stock news, AMP has warned shareholders to lower their profit expectations, while releasing its $615 million royal commission damage control plan. The troubled wealth management firm is expecting to report an underlying first-half profit of between $489 million-$500 million in early-August.
The New Zealand market rallied on Friday (NZX 50 index +0.71%) in light trading as investors prepare for local earnings season. Shares in Pushpay led market returns as the stock recovered from recent selling. Pushpay has said it had nothing to disclose in response to a share price enquiry from the NZX, which queried the stock falling relatively sharply between July 18th and July 25th. In other news, Evolve Education shares rose on the back of speculation the business is being targeted for takeover by Australia's Affinity Education Group.
3 Things Markets Will be Watching this Week
1. US corporate earnings season continues as investors digest quarterly company profit announcements.
2. Locally, investors in Australia and NZ will also turn their attention to corporate profit announcements which kick off this week.
3. NZ employment figures are released on Wednesday, the US Federal Reserve makes an interest rate decision on Thursday morning (AU/NZ time).
Have a Great Day,
Team