Amazon warns of FX headwinds on revenue

General market commentary

Equity markets experienced a mixed session on Thursday, with U.S. shares fluctuating as investors absorbed a variety of earnings reports ahead of the highly anticipated jobs data later today. The S&P 500 and Nasdaq posted modest gains, driven by consumer staples, financials, and technology shares, while the Dow slipped slightly. Investors showed caution, focusing on corporate results and economic indicators, such as jobless claims and labor costs, which hinted at a resilient labour market. Meanwhile, global markets saw European equities hit record highs, bolstered by positive earnings and expectations of a potential peace plan for Ukraine. The Bank of England’s interest rate cut provided further support for European shares, although concerns over inflation and geopolitical risks persist.

In commodities, oil prices reversed earlier gains due to concerns about oversupply after President Trump’s comments on increasing production, while gold’s rally came to a halt amid easing fears of a global trade war. The U.S. dollar gained ground against major currencies, supported by rising bond yields and expectations of stronger economic growth. On the labour front, the latest data suggested a healthy job market, with unit labour costs rising at a slower pace than expected, which may help moderate inflation. With the January employment report due later today, attention is turning to how the data may influence the Federal Reserve’s monetary policy outlook, particularly amid ongoing uncertainties in global trade and political landscapes. After hours, Amazon’s shares fell by over 4% following its earnings report, as weaker-than-expected first-quarter revenue guidance raised concerns among investors.

Latest market and economic update

Most Asian equities fell on Friday, with Japan’s Nikkei 225 and South Korea’s KOSPI seeing losses amid global uncertainty and concerns over U.S. policies. However, Chinese shares rose, driven by optimism in the AI sector, as the Shanghai Composite and Shenzhen CSI 300 both posted solid gains despite ongoing tariffs.

U.S. equity futures indicate a lower open later in the day as investors await the highly anticipated jobs report, which is expected to provide clues on the Federal Reserve's next move on interest rates. Amazon’s after-hours decline may also weigh on market sentiment, following its weak first-quarter revenue guidance.

European shares closed sharply higher on Thursday, with the STOXX 50 and STOXX 600 reaching near 25-year and record highs, respectively, boosted by strong earnings and a pullback in borrowing costs. Key market movers included heavyweight banks like BBVA, Santander, and UniCredit, industrials such as Saint Gobain and Siemens, and a notable 6.3% surge for AstraZeneca following strong results.

The U.S. dollar held steady around 107.7 on Friday as traders awaited the upcoming jobs report, with markets pricing in two potential rate cuts by the Federal Reserve this year. The EUR/USD exchange rate was trading at 1.0381, reflecting the dollar’s relative strength, despite easing concerns over a global trade war.

Oil prices remained largely unchanged this morning but were set for a third consecutive weekly decline, pressured by concerns over an oversupplied market and ongoing U.S.-China trade tensions. Fears of a supply glut intensified following President Trump's pledge to boost U.S. production and a sharp increase in U.S. crude stockpiles, while China's retaliatory tariffs on U.S. oil added further uncertainty to global demand.

The Bank of England lowered interest rates by 0.25% to 4.5% to help stimulate the UK’s weak economy, marking only the third rate cut since the COVID-19 pandemic. Despite inflation remaining above the 2% target at 2.5%, analysts anticipate more rate cuts by the end of 2025, as wage growth is expected to slow and economic pressures persist.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Amazon's shares fell after the company reported weaker-than-expected forecasts for first-quarter revenue and profit, driven by slower-than-anticipated growth in its cloud computing division, AWS. Despite reporting a strong 7% increase in retail sales and a nearly doubling of net income to $20 billion, the company struggled with capital expenditure concerns and cloud growth challenges, particularly related to AI development and chip shortages.

Eli Lilly's full-year profit forecast for 2025 exceeded Wall Street expectations, projecting a 32% growth driven by its expanding weight-loss treatments, including Mounjaro. Despite missing quarterly sales targets for its obesity drugs, the company remains optimistic about strong future performance and upcoming Phase 3 trials.

ConocoPhillips reported fourth-quarter adjusted earnings that exceeded expectations, driven by a 15% increase in production and strong operational execution. For 2025, the company set a production target of 2.34 to 2.38 million barrels of oil equivalent per day and announced a capital expenditure budget of $12.9 billion, alongside a quarterly dividend of $0.78 per share.

Bristol Myers Squibb reported better-than-expected fourth-quarter earnings but forecast a sharper decline in 2025 revenue due to generic competition for several of its older cancer drugs. The company is also expanding its cost-cutting programme by $2 billion, aiming to mitigate the impact of revenue losses from drugs like Revlimid and others losing exclusivity.

Vinci reported a 4% rise in annual revenue to €71.6 billion for 2024, with strong growth in international markets, particularly driven by its energy division and Vinci Airports. Despite economic uncertainties, the company remains confident for 2025, bolstered by a strong order book and a proposed dividend of €4.75 per share.

Fortinet's fourth-quarter earnings exceeded expectations, with per share earnings of $0.74 and revenue of $1.66 billion, driving an almost 8% increase in shares during after-hours trading. The company forecasted strong first-quarter and full-year 2025 results, with revenue slightly above consensus, and also announced the retirement of CFO Keith Jensen in May, with Christiane Ohlgart set to succeed him.

Monolithic Power Systems saw its shares rise 11% after reporting better-than-expected fourth-quarter earnings, with revenue up 36.9% year-on-year to $621.7 million, and providing strong guidance for the first quarter of 2025. The company, which posted record annual revenue of $2.2 billion, also announced a 25% increase in its quarterly dividend and a new $500 million stock repurchase programme.

L’Oreal's fourth-quarter sales fell short of expectations, driven by continued weakness in the Chinese market and slower demand in the U.S., with North Asia seeing a 3.6% decline. Despite this, the company remains optimistic about the global beauty market, with full-year sales rising 5.1%, bolstered by growth in its dermatological beauty and professional products divisions.

Elf Beauty's shares plummeted over 20% after the company lowered its annual net sales and profit forecasts, citing weak demand in the mass beauty sector and slower-than-expected performance of newer products. The cosmetics brand, which targets Gen Z, also faces challenges from geopolitical uncertainty, rising tariffs, and inflation concerns, leading to a more cautious outlook for the remainder of its fiscal year.

Pinterest reported strong revenue growth in the fourth quarter, surpassing Wall Street estimates with $1.15 billion in revenue, though earnings fell short of expectations. The company also saw strong user growth, with global monthly active users rising 11% year-on-year, and has forecasted first-quarter revenue between $837 million and $852 million.

Cloudflare's shares rose 11.8% after reporting better-than-expected fourth-quarter results, with revenue up 27% year-on-year to $459.9 million and a significant increase in customers spending over $1 million annually. The company provided an optimistic 2025 outlook, forecasting annual revenue just shy of consensus but surpassing EPS expectations, and ended 2024 with $1.86 billion in cash and equivalents.

Under Armour raised its full-year profit forecast after surpassing third-quarter expectations, driven by its efforts to reduce discounts and stronger demand in North America and Asia. While quarterly revenue fell slightly in key markets, the company improved its margins through better pricing strategies and lower product and freight costs, exceeding earnings forecasts for the quarter.

Tapestry raised its annual sales and profit forecast, driven by strong demand for its Tabby bags and suede boots across Europe, North America, and China, along with better-than-expected second-quarter results. The company saw growth in key markets, with Coach brand sales rising 10% and gross margins expanding, as it focused on selling products at full price and launching new styles to maintain consumer interest.

Ralph Lauren raised its annual revenue forecast, driven by strong demand from younger shoppers for its spring collection, which includes dresses, trousers, and floral jackets, alongside growing sales in China. The company also saw a recovery in its North American wholesale business and continued strong performance in its direct-to-customer channels, leading to an increased revenue outlook of 6-7% growth for 2025, up from the previous 3-4% estimate.

Roblox forecasted annual bookings for 2025 below market expectations, raising concerns about slowing growth after years of rapid progress. While the company is still projected to grow bookings by around 20%, it faces challenges from declining daily active users and external issues, such as its suspension in Turkey and tough year-on-year comparisons.

Philip Morris International exceeded fourth-quarter expectations, driven by strong demand for its smoking alternatives like ZYN nicotine pouches, which saw significant growth, particularly in the U.S. The company reported higher net sales and adjusted earnings, while also raising its full-year earnings forecast above analyst expectations.

Societe Generale reported stronger-than-expected fourth-quarter results, with a net profit of €1.04 billion and revenue of €6.62 billion, driven by strong performances in its Global Banking and Investor Solutions division. The bank also raised its capital distribution policy, announced a €1.09 dividend per share, and launched a €868 million share buyback program, while outlining ambitious growth targets for 2025 and beyond.

AstraZeneca reported a 24% year-on-year revenue increase in Q4, driven by strong sales in oncology, cardiovascular, and respiratory treatments, with oncology leading the way. The company projects high single-digit revenue growth and low double-digit core earnings per share growth for 2025, continuing its focus on R&D and key drug approvals.

Peloton raised its core profit forecast for fiscal year 2025, driven by cost reductions and a focus on app-based subscriptions. The company also increased its forecast for connected fitness subscriptions and continues its shift from hardware to a software-first model, despite posting a larger-than-expected second-quarter loss.

ArcelorMittal reported stronger-than-expected fourth-quarter earnings, driven by a rebound in mining volumes and solid cash flow generation, while also raising its dividend and providing an optimistic outlook for 2025. The company expects positive free cash flow and increased shipments, supported by continued operational optimisations and growth in EBITDA, including an expansion of its Liberia operations and a new electrical steels facility in Calvert.

Honeywell announced it will split into three separately listed companies, following pressure from activist investor Elliott Management, with a focus on its aerospace, automation, and advanced materials units. Despite the long-term potential, the company forecast weaker-than-expected results for 2025, with sales and profit projections falling short of analysts' estimates.

Netflix is considering a bid for the U.S. broadcast rights to Formula 1 as part of its strategy to expand into live sports, following the success of its Drive to Survive documentary series. If successful, this would be Netflix's first major acquisition of season-long mainstream sports rights, with Formula 1's growing U.S. popularity and relatively lower rights costs making it an attractive option.

Salesforce appointed Robin Washington as its combined President and Chief Operating and Financial Officer, effective March 2025, following Brian Millham's retirement after 25 years with the company. However, the market did not take the news well, with analysts expressing mixed views and raising concerns about the consolidation of the two roles and its potential impact on the company’s growth and strategy.

Nissan shares rose by 5% on Friday after reports emerged that the automaker is ending merger talks with Honda, potentially paving the way for a partnership with Taiwan's Foxconn. The decision to terminate the discussions, which had stalled due to disagreements, comes as Nissan explores collaborations beyond the automotive sector, including with tech companies like Foxconn, particularly in the electric vehicle market.

Morgan Stanley has reiterated its "Top Pick" stance on Nvidia, viewing the recent selloff as a buying opportunity, despite concerns over competition from DeepSeek. The bank remains optimistic about Nvidia's growth prospects, particularly with strong demand for its AI chips, and expects positive momentum to return after the company reports earnings later this month.

Deutsche Bank initiated coverage on Ferrari with a Hold rating and a price target of €430, citing the company's strong pricing power, backlog, and high margins but expressing concerns about its high valuation and transition to electric vehicles. While Ferrari’s fundamentals remain strong, analysts believe its premium valuation limits potential upside, particularly as it navigates the shift to electrification.

Morgan Stanley upgraded Infineon to "overweight" and raised its price target to €40, citing strong fundamentals and a positive outlook, especially in automotive and industrial semiconductors. The company’s resilience in margins, exposure to silicon carbide technology, and growing market share in electric vehicles and AI power solutions strengthen its position in the semiconductor sector.

Upcoming data and events

Today, key economic data will include the January Nonfarm Payrolls report with an expected 256,000 jobs added, the Unemployment Rate at 4.1%, and the U.S. University of Michigan Consumer Sentiment Index, alongside wholesale inventories figures. The earnings calendar is quite light today with only relatively smaller companies reporting.

For more information visit https://cc.com.mt/. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice.