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GBP/USD price may correct lower

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Goldman Sachs’ stock surges on upbeat Q2

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Caution ahead of Netflix’s earnings?

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Adobe’s shares spike on Q2 results & FY guidance

Monday, June 17, 2024

Today’s headlines

What’s happening: Shares of Adobe rose sharply on Friday after the company released results for its fiscal second quarter.

What happened: The company reported stronger-than-expected sales and earnings for its latest quarter.

Adobe also issued strong guidance for the year, which led to the stock recording its biggest gain in more than four years.

How were the results: The San Jose, California-based company has topped market expectations on both top- and bottom-lines for six straight quarters.

  • Revenues grew by 10% year-over-year to $5.31 billion, exceeding consensus estimates of $5.292 billion.
  • Adjusted earnings came in at $4.48 per share, topping Wall Street expectations of $4.39 per share.

Why it matters: Investors were concerned about the GenAI trend weighing on the market share of the longtime leader in editing tools. Several AI startups providing competing tools, including OpenAI’s Dall-E maker, were expected to result in a loss of customers for Adobe.

However, the company’s strong quarterly results and upbeat forecast for the year allayed those concerns for now.

Adobe reported $3.91 billion in revenue from its digital media business, representing around 74% of total revenues for the second quarter. The company’s document cloud unit added $165 million of new annually recurring business last quarter, higher than market expectations of $122.7 million.

The company said its RPOs (remaining performance obligations) were $17.86 billion at the close of the quarter, while cash flows from operations were $1.94 billion.

“Adobe achieved record revenue of $5.31 billion driven by strong growth across Creative Cloud, Document Cloud and Experience Cloud. Our highly differentiated approach to AI and innovative product delivery are attracting an expanding universe of customers and providing more value to existing users,” CEO Shantanu Narayen said during the earnings call.

Management guided to revenues between $5.33 billion and $5.38 billion and adjusted earnings of $4.50 to $4.55 per share for the second quarter, higher than the current consensus estimate of $5.03 billion and $4.17 per share.

For the full year, management projected revenues between $21.4 billion and $21.5 billion and adjusted earnings of $18 to $18.20 per share.

How shares responded: Adobe’s shares jumped 14.5% to close at $525.31 on Friday, following the release of quarterly results. The stock has lost around 10% over the past six months.

What to watch: Investors will continue monitoring GenAI adoption and the influx of startups in the space. Markets will also keep an eye on Adobe’s use of AI in its products.

The markets today

Gold will be in focus after closing higher on Friday

Context: Gold prices surged more than 1% on Friday, as signs of easing US inflation increased prospects of the Federal Reserve cutting its benchmark interest rate this year.

Details: Data from the US released last week showed consumer prices coming in unchanged for May, while producer prices declined. The annual inflation rate in the US eased to 3.3% in May, reaching the lowest level in three months.

The data release fuelled speculations of interest rate cuts of as much as 52 bps by the end of December, following softer-than-expected inflation data. Markets were earlier expecting rate cuts below 40 bps after the US released a stronger-than-expected NFP report last week. A lower interest rate increases the appeal of the non-yielding gold.

Strength in greenback limited the overall gains for the yellow metal, as a higher US dollar makes metals more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained 0.31% to 105.52 on Friday.

Gold for August delivery rose $31.10 to close at $2,349.10 per ounce on Friday.

In other metals trading, silver for July delivery added 40 cents to settle at $29.47 per ounce, July copper gained 2 cents to $4.50 per pound and platinum settled higher at $958.6, while palladium surged at $898.50.

What to watch: Investors will continue monitoring interest rate decisions by major central banks around the world, which could provide direction to gold prices ahead.

Other Markets: European indices closed lower on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.21%, 1.44%, 2.66% and 0.97%, respectively.

The news shaping the markets

Ukrainian President Volodymyr Zelenskyy said that the current level of military aid being sent by the Western nations was not enough for its victory against Russia. The news sent the safe-haven US dollar index slightly lower in forex trading this morning.


China’s retail sales climbed by 3.7% year-over-year in May, accelerating from the previous month’s 2.3% growth. The latest reading also topped market estimates of a 3% gain, lending support to the CNY/USD forex pair.


Japan’s core machinery orders declined 2 .9% to ¥885.3 billion in April, sending the JPY/USD pair lower in forex trading this morning.


New Zealand’s BusinessNZ performance of services index declined by 3.6 points to a reading of 43.0 in May, which exerted pressure on the NZD/USD forex pair.


Saudi Arabia’s annual wholesale price inflation slowed to 3.2% in May, from 3.4% a month ago. The recent reading being the lowest since February sent the SAR/USD pair higher in forex trading this morning.

What else to watch today

Italy’s inflation rate, Spain’s balance of trade, Eurozone’s hourly labour costs, wage growth and inflation expectations over the next 12 months, Canada’s housing starts and foreign investment in Canadian securities, as well as US NY Empire State Manufacturing Index.


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