FedEx delivers Q1 earnings beat, shares jump 5.5%

Today’s headlines

What’s happening: Shares of FedEx Corp surged in after-hours trading on Thursday, following the release of the company’s results for the first quarter of fiscal 2026.

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

FedEx also reinstated its guidance for the full year, providing a boost to its stock during the extended trading session.

How were the results: The Memphis, Tennessee-based company reported a low single-digit gain in revenue for its first quarter ended August 31.

• Revenue rose almost 3% to $22.2 billion, topping Wall Street expectations of $21.67 billion.
• Adjusted earnings climbed to $3.83 per share, from $3.60 per share in the year-ago quarter, beating consensus estimates of $3.62 per share.

Why it matters: Shares of FedEx had lost around 20% year to date before the release of the earnings report on Thursday, as the company suspended its forecast in June amid concerns around higher tariffs weighing on consumer spending and, in turn, shipping demand. Rival shipper United Parcel Service (UPS) had also held off on issuing its full-year guidance in July.

The company indicated that global tariffs had impacted its first-quarter revenues by $150 million, an impact that is expected to repeat every quarter this year. This, combined with other trade policies represent a revenue headwind of as much as $1 billion for the year, FedEx’s Chief Customer Officer said.

Against this backdrop, FedEx has been working on its cost-cutting plan, which targets $1 billion in cost savings by May 2026. The initiatives include closing facilities, grounding planes, and merging some of its units.

FedEx’s total international average daily export volume declined 3% in the quarter, while overall average daily volume (including domestic parcels) climbed 4%. Revenue per package grew by 2%.

The Federal Express division recorded an improvement in operating results in the latest quarter, following a rise in domestic and international priority package yields and higher domestic package volumes.

The Freight division’s profitability was hit by a decline in revenue, higher wage rates and more hiring of dedicated LTL sales professionals. The company also said that its planned FedEx Freight spinoff is projected to be executed by June 2026.

FedEx guided to revenue growth of 4%-6% and adjusted earnings of $17.20-$19.00 per share for fiscal 2026.

How shares responded: FedEx’s shares rose 5.5% to $238.91 in the after-hours trading session on Thursday following the release of quarterly results. The company’s stock has lost around 8% over the past six months.

What to watch: Investors will continue monitoring the company’s cost cutting plan and any tariff related announcement from the government.

The markets today

The Japanese yen in focus today ahead of some major economic reports next week

Context: The JPY/USD forex pair edged lower this morning amid strength in the US dollar.

Details: Data released this morning showed Japan’s annual inflation rate slowed to 2.7% in August, from 3.1% in July, hitting the lowest level since October 2024. Food prices in Japan climbed by 7.2% year-over-year in August, easing from the 7.6% gain in July.

The core consumer price index rose 2.7% year-over-year in August, slowing for the third straight month to its lowest mark since November 2024. However, core inflation remained above the Bank of Japan’s target of 2%.

The central bank is projected to keep interest rates unchanged at its September meeting mainly due to concerns around US tariffs impacting economic growth.

Strength in the US dollar weighed on the JPY/USD pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.1% to 97.44 this morning.

The JPY/USD forex pair slipped to 148.04 this morning, while the Nikkei 225 rose 0.77% to trade at 45,653.93.

What to watch: Markets will monitor data on S&P Global manufacturing PMI, S&P Global services PMI and S&P Global composite PMI from Japan, due to be released on Wednesday. The S&P Global Japan manufacturing PMI, which rose to 49.7 in August from the final reading of 48.9 in July, is expected to climb to 50.3 in September.

Analysts expect the services PMI to rise to 53.4 in September from 53.1 in August, while the composite PMI is projected to surge to 52.2 in September, from 52.0 in the previous month.

Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.21%, 1.35%, 0.87% and 0.80%, respectively.

The news shaping the markets

President Donald Trump said that the US would help secure peace after the end of the Russia-Ukraine war. The news sent the RUB/USD pair higher in forex trading this morning.

The UAE raised its GDP growth estimates for 2025 to 4.9%, from the previous forecast of 4.4%, lending support to the AED/USD forex pair.

UK’s GfK consumer confidence index declined to -19 in September, from -17 in the previous month. The latest reading coming in weaker than market estimates of -18 sent the GBP/USD pair lower in forex trading this morning.

Argentina’s trade surplus fell to $1.402 billion in August, from $1.875 billion in the year-ago period, exerting pressure on the ARS/USD forex pair.

Canada’s CFIB Business Barometer long-term index climbed to 50.2 in September, up two points from the previous month. However, the CAD/USD pair fell slightly in forex trading this morning.

What else to watch today

Italy’s construction output (1200 UAE Time), India’s foreign exchange reserves (1530 UAE Time), Mexico’s aggregate demand (1600 UAE Time) and private spending (1600 UAE Time), Canada’s retail sales (1630 UAE Time), Argentina’s consumer confidence (1800 UAE Time), as well as US Baker Hughes oil rig count (2100 UAE Time) and Baker Hughes total rigs count (2100 UAE Time).