US equities rallied on Thursday, supported by strong company earnings results. According to Credit Suisse, the current earnings season has delivered more good than bad, with 76% of companies beating analysts' projections.
The S&P500 surged 2.47% to close at 4,278.50, while the Nasdaq100 surged 3.48%, ending the day at 13,456.06. Meta Platforms (FB) and PTC Inc. (PTC) were the top performers from the S&P500, both up a little over 17%. Breadth was strong, with all eleven sectors closing the day in the green.
Earnings season continues in the US, with several big names reporting their Q1 results on Thursday. Apple (APPL) reported an 8.6% year-on-year increase in the revenues, totaling US$97.28 billion, which was above analysts’ expectations of US$93.98 billion. The company also announced a 5% increase to its dividend and an increase of US$90 billion to its share buyback plan. The headline results were somewhat overshadowed by their forward guidance, which is clearly being impacted by the coronavirus lockdowns in China. The company warned that supply-side constraints would cost them between US$4 and US$8 billion in the current quarter. The share price has been volatile in after-market trading, swinging from a 3% gain to as much as a 6.2% loss, following a close in the cash market at US$163.64 per share.
Amazon (AMZN) was the other major to report its results after market close, with the share price falling 10% in extended trading following disappointing figures. The company reported net sales growth of 7.3% year on year, however, their updated forecasts for the second quarter came in well below market expectations, at US$116 billion to US$121 billion, below that forecasted of US$125.01 billion. The share price had rallied strongly in the cash session, up 4.65% to close at US$2,891.93, however, expect these gains to be reversed on Friday.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
On the economic front, US GDP figures for Q1 came in well below expectations, at-1.4%, compared to consensus estimates for a gain of +1.0%. The surprise contraction in US economic growth may be seen by some as an excuse for the US Federal Reserve to talk back interest rate hikes, the flow-on effect, being inflationary pressures may remain higher for longer. The yield on the US 10-year note closed unchanged at 2.82%.
To Japan, the Yen sunk to new lows, with the US Dollar now buying 130.84 Japanese yen, following comments from the Bank of Japan that they remain committed to defending a yield of 0.25% on their 10-year bond. To explain, with the yield in Japan effectively pegged at 0.25% via yield curve control, and yields globally on the rise, the yield differentials between Japan and other major economies continue to grow. The outlet for this is a weaker yen.
Commodity markets, and energy was up firmly, with WTI Crude Oil gaining 3.3% to close at US$105.36, new highs for the week, while heating oil gained 9.8%. Base metal prices were firmer, with Aluminum and Nickel gaining by 0.95% and 0.68% respectively, while spot gold reversed early losses to close at US$1,894.53 an oz.
Aussie Investors should expect a stronger open to our trading on Friday, with ASX SPI200 futures up 50 points (+0.68%) to 7,384, with the Australian dollar is currently buying 70.97 US cents.
This article was written by Oliver Gordon, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
