Alibaba delivers upbeat print, shares rise

The news shaping the markets today

Russia’s military forces have shelled Nikopol in Ukraine’s Dnipropetrovsk region, which lies near Europe’s biggest nuclear plant in Zaporizhzhia. The news sent WTI crude oil prices higher this morning.

Australia’s services index climbed 2.9 points to 51.7 in July, supporting the AUD/USD forex pair.

Japan’s household spending rose by 3.5% in real terms from the previous year in June, following a 0.5% decline in the prior month. The JPY/USD pair declined in forex trading this morning.

Indonesia’s economy grew by 5.44% year-over-year in the second quarter, after a 5.01% expansion in the prior quarter. The figure exceeded market expectations of 5.17% growth. The latest figure also signalled the fifth consecutive quarter of annual expansion, which lent support to the IDR/USD forex pair.

The Philippines announced a rise in its annual inflation rate to 6.4% in July, from 6.1% in the previous month, surging to the highest level since October 2018. However, the PHP/USD pair rose in forex trading this morning.

What’s happening: Shares of Alibaba Group Holding Limited rose on Thursday, after the company reported better-than-expected results for its fiscal first quarter.

What happened: Alibaba reported flat quarterly revenues for the first time on record.

The Chinese ecommerce giant said covid-19 restrictions in the country significantly impacted its business.

How were the results: Alibaba reported a marked decline in net income for the quarter ending June, but the figure still surpassed market estimates.

• Revenue came in flat at 205.56 billion yuan ($30.43 billion) but still exceeded market expectations.
• Net income attributable to ordinary shareholders almost halved to 22.74 billion yuan during the quarter.
• Adjusted earnings came in at 11.73 yuan per share, topping market views of 10.39 yuan.

Why it matters: Alibaba, which at one time had the highest valuation among Chinese companies, has seen a sharp decline in its market capitalisation due to Beijing’s crackdown on tech companies for more than a year ago.

Alibaba has recorded double-digit revenue growth for almost every quarter since it became a public company in 2014. However, flat revenues in the latest quarter showed the impact of China’s covid-19 restrictions in several cities between April and May, following the spread of the Omicron variant.

Revenues from its customer management segment, which contributes around a third of the company’s overall revenues, contracted by 10% to 80.4 billion yuan. Revenues from the core China commerce division also declined 1% year-over-, recording the first downturn on record. Cloud computing revenues grew by 10% year-over-year, while local consumer services rose by 5% last quarter.

How shares responded: Alibaba’s shares rose 1.8% to close at $97.43 on Thursday, following the release of upbeat quarterly results. The stock has lost over 19% year to date. The company’s shares have lost around two-thirds of their value since late 2020 after China’s regulators halted the IPO of its affiliate Ant Group.

What to watch: Markets will keep an eye on regulatory pressures on the impact of Alibaba. Rising competition from rivals like Pinduoduo, JD.com Inc and ByteDance will also remain in focus.

The markets today

US stocks will be in focus today ahead of the much-awaited NFP (non-farm payrolls) report from the country

Context: Stocks on Wall Street closed mixed on Thursday, following the release of earnings and economic reports.

Details: US stocks recorded sharp gains on Wednesday, with the Dow Jones climbing more than 400 points and the S&P 500 reaching its strongest level since June.

The US Labor Department released data on jobless claims, which showed initial claims for unemployment insurance rising to 260,000 last week. The latest reading represented a gain of 6,000 from the prior week and came in slightly higher than market expectations of 259,000.

The US trade deficit in goods and services shrank by $5.3 billion to $79.6 billion in June and came in lower than the consensus estimate of $80 billion.

A decline in WTI crude oil prices on Thursday, amid concerns related to a slowdown in the global economy, resulted in a sharp decline in energy stocks.

Shares of Eli Lilly and Company fell around 2.6% on Thursday after the company reported downbeat quarterly results and lowered its full-year guidance. Kellogg’s shares rose on reported better-than-expected Q2 results and management lifting their estimates for the year.

The Dow Jones index shed 85.68 points, or 0.26%, to close at 32,726.82 on Thursday. The S&P 500 declined 0.08% to 4,151.94, after climbing to its strongest level since June. The Nasdaq 100 climbed 0.44% to settle at 13,311.04.

What to watch: Markets await the release of jobs data from the US today, which will provide insight into the overall health of the economy. The American economy, which added 372,000 payrolls in June, is expected to add 250,000 jobs in July. The unemployment rate in the country is expected to remain unchanged at 3.6%.

Other Markets: European trading indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 0.03%, 0.55%, 0.64% and 0.18%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Germany’s industrial production and car registrations, South Africa’s foreign exchange reserves, the UK’s house price index, France’s industrial production, balance of trade, payroll employment in the private sector, current account, exports, imports, foreign exchange reserves, Spain’s industrial production, Italy’s industrial production, Russia’s total vehicle sales and foreign exchange reserves, Mexico’s auto exports, gross fixed investment and car production, India’s foreign exchange reserves, Canada’s unemployment rate, employment change and Ivey Purchasing Managers Index, Brazil’s car production and car registrations, Turkey’s treasury cash balance, US Baker Hughes crude oil rigs and consumer credit, as well as China’s current account.