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Oracle’s stock spikes in strong Q2 results

 

Tuesday, December 13, 2022, 8.45am GMT

The news shaping the markets today

Ukrainian President Volodymyr Zelenskyy has asked the G7 nations to supply natural gas as well as long-range weapons. Despite the ongoing conflict, the safe-haven US dollar index traded lower this morning.


Australia’s Westpac-Melbourne Institute Index of Consumer Sentiment rose 3% to 80 in December. An improvement in consumer sentiment for the first time since September lent support to the AUD/USD forex pair.


Brazil’s Industrial Entrepreneur Confidence Index fell to 50.8 points in December. This being the weakest print since July 2020 sent the BRL/USD pair lower in forex trading this morning.


The US government budget deficit increased by 30% to $249 billion in November, from $191 billion in the year-ago month. However, the Dow Jones index jumped by more than 500 points on Monday.


New Zealand’s food prices accelerated 10.7% year-over-year in November, recording the highest annual growth since 2008. Despite this, the NZD/USD pair rose in forex trading this morning.

 

What’s happening: Shares of Oracle Corp gained on Monday after the company released results for its fiscal second quarter.

What happened: The software giant reported better-than-expected sales and earnings for the quarter.

Oracle said Cerner, which it had acquired in June, also contributed to growth in the latest quarter.

How were the results: The enterprise software giant reported double-digit growth in sales in the period ended November 30, with both top- and bottom-line metrics surpassing market views.

  • Revenues grew 18% year-over-year to $12.3 billion, exceeding the consensus estimates of $12.04 billion.
  • Earnings came in at $1.21 per share, also topping Street expectations of $1.18 per share..

Why it matters: Oracle, which sells enterprise software applications, has been looking to expand its renting computing power and storage business. During its analyst day in October, the company had said it expects its cloud business to generate annual revenues of $65 billion by fiscal 2026.

Last week, Oracle and its peers, including Amazon Web Services, Google and Microsoft, were awarded a share of a contract by the US Department of Defense for cloud services worth $9 billion.

During the latest earnings call, Oracle said its cloud revenues had jumped 43% to $3.8 billion in the quarter, after recording 45% growth in the previous quarter.

Oracle completed its acquisition of Cerner, which is focused on modernising information systems in the healthcare industry. Cerner recorded total revenues of $1.5 billion during the quarter. “Since the acquisition, Cerner has contributed to Oracle’s growth – and Oracle has helped Cerner improve its technology,” Chairman Larry Ellison said.

Revenue from NetSuite’s enterprise planning tools climbed 25% during the quarter, versus 27% growth in the previous quarter.

The company’s board declared a quarterly cash dividend of 32 cents per share.

Management guided to revenue growth of 17%-19% for the current quarter, versus analyst expectations of 17%. They also projected earnings to climb as much as $1.21 per share, including the negative impact from currency fluctuations. The estimate fell short of Street expectations of $1.24 per share.

How shares responded: Oracle’s shares gained 2.1% to $82.97 in after-hours trading on Monday, following the release of quarterly results. The stock also added around 1.8% during the regular trading session.

What to watch: Investors will keep an eye on the company’s growth plans, as it looks to build inroads into the healthcare segment through its acquisition of Cerner, as well as the progress of the cloud business.

The markets today

Crude oil will be in focus today ahead of the API’s (American Petroleum Institute) report on stockpiles

Context: Oil futures settled higher on Monday, with prices for the US benchmark moving above the $73-per-barrel level.

Details: Oil prices slid sharply last week, despite the EU’s ban on imports of seaborne crude from Russia and the G7 price cap on oil from the country coming into effect. Russia’s President Vladimir Putin responded to the price cap with a warning to lowering oil production.

Traders monitored updates from the Keystone pipeline, which was closed due to a leakage. So far, the Canadian operator has not provided any timeline for restarting the pipeline.

China announced plans to ease its covid-19 restrictions, but the news failed to provide support to oil prices last week amid rising concerns of a potential economic slowdown.

Colder-than-usual weather forecasts across most regions of the US over the next two weeks released by the National Weather Service’s Climate Prediction Center provided support to natural gas prices.

WTI crude oil for January delivery gained $2.15 to settle at $73.17 per barrel on Monday, while Brent crude for February delivery added $1.89 to $77.99 per barrel.

In other energy trading, wholesale gasoline for January delivery rose 2 cents to $2.08 a gallon, while January natural gas jumped 34 cents to $6.59 per 1,000 cubic feet.

What are expectations: Traders await data on crude oil stockpiles from the API today. Inventories of crude oil in the US had contracted by 6.426 million barrels in the week ended December 2, after a decline of 7.850 million barrels in the prior week.

Markets will also keep an eye on the Keystone pipeline, as a further shutdown could boost to oil prices.

Other Markets: European trading indices closed lower on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 down by 0.41%, 0.45%, 0.41% and 0.49%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY – 137.67 and 137.81 Positive
GBP/USD – 1.2275 and 1.2277 Negative
WTI Crude Oil – 73.72 and 73.87 Positive
Natural Gas – 6.625 and 6.669 Positive
Nasdaq 100 – 11673.83 and 11721.37 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0547, 0.08%) Dow ($34,281, 0.03%) Brent ($79.00, 1.3%)
GBP/USD (1.2276, 0.02%) S&P500 ($4,023, -0.04%) WTI ($74.15, 1.3%)
USD/JPY (137.63, -0.01%) Nasdaq ($11,819, -0.09%) Gold ($1,796, 0.2%)

What else to watch today

France’s payroll employment, Germany’s inflation rate, current account, ZEW indicator of economic sentiment and ZEW indicator of current conditions, Turkey’s industrial production, retail sales and industrial production, UK’s claimant count change, employment change and unemployment rate, Italy’s industrial production, South Africa’s mining production, gold production and SACCI business confidence index, Eurozone’s ZEW indicator of economic sentiment, US NFIB small business optimism index, inflation rate, Redbook index, IBD/TIPP economic optimism index, as well as Canada’s new motor vehicle sales.

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