Both Microsoft and Alphabet reported their earnings after the closing bell of the markets yesterday. Alphabet exceeded analysts expectations on most fronts, with revenues soaring. Investors were already responding well to the anticipation of the announcement and are likely to send the stock prices climbing to new highs when the markets open this morning. AI rival Microsoft didn’t fare so well, with their cloud division showing a slowing in growth, which may send their share price in the opposite direction to Alphabet’s.
All this exciting market activity in earnings season is helping to mask the fears around two major decisions this week: both the Fed in the USA and the ECB in Europe are set to decide whether to raise interest rates once again. The Fed is due first today, with the European Central Bank following suit tomorrow. Whilst both the US and many other countries are seeing a fall in inflation, Australia yesterday for example announced a further fall in inflation from 7% to 6%, it still isn’t at the 2% mark that many governments are aiming for. A raise in interest rates is rarely received well by the markets, but it could be that further strong earnings help to keep sentiment buoyant into the second half of the week.
Unilever’s earnings announcements released yesterday showed that profits were firmly up, sending stock prices up by over 6%. The European consumer goods company owns some major household brands, including Dove, Ben & Jerry’s and Marmite, which have all seen significant product price increases over the past year. Whilst Unilever acknowledged that we’re over the peak of inflation, they also increased revenue forecasts for the year which was well received by investors.
Sources: Financial Times, Bloomberg, AJ Bell, The Guardian