Investors shop Amazon shares on strong earnings

Today’s headlines

What’s happening: Shares of Amazon.com, Inc. gained in after-hours trading on Thursday, following the release of the company’s third-quarter results.

What happened: The internet retail giant reported stronger-than-expected results for the latest quarter.

Amazon also recorded a more than fivefold increase in one of its major metrics, providing a boost to its shares.

How were the results: The Seattle, Washington-based company reported a low double-digit increase in sales for the three months ended September.

• Revenues grew by 13% year-over-year to $143.1 billion, topping the consensus estimates of $141.42 billion.
• Earnings surged to 94 cents per share, from 28 cents per share in the year-ago quarter, and surpassed Wall Street expectations of 58 cents per share.

Why it matters: Amazon faced several challenges in the latest quarter, including high inflation, lower consumer budgets and companies cutting back their cloud spend. Although the company managed to reduce its transportation costs, this was somewhat offset by higher energy costs.

The company has been looking to accelerate its cloud presence and gain market share from its major rivals Google and Microsoft. Amazon recently announced a deal to invest up to $4 billion in the AI startup Anthropic.

The company’s online sales grew 6% to $57.27 billion, signalling a modest improvement in consumer spending.

Amazon’s AWS sales rose 12% year-over-year to $23.1 billion. North America sales climbed 11% to $87.9 billion, while international sales jumped 16% to $32.1 billion.

The company’s operating income jumped more than 500% to $11.2 billion and beat market expectations of $7.7 billion.

Amazon guided to revenues between $160 billion and $167 billion for the holiday quarter ending December 31, compared to expectations of $166.62 billion. Operating income is seen between $7 billion and $11 billion for the quarter.

How shares responded: Amazon’s shares rose 5.4% to $125.98 in the extended trading session on Thursday, following the release of quarterly results. The stock has added around 39% year to date.

What to watch: Investors will monitor inflation levels and the company’s energy costs. Markets will also watch stiffening \competition in the cloud business.

The markets today

European stocks will be in focus today ahead of a basket of economic reports

Context: European markets settled lower on Thursday as investors assessed earnings reports and the ECB’s rate decision.

Details: The European Central Bank kept interest rates unchanged at its latest meeting, ending a streak of 10 straight rate hikes. Markets had already priced in the ECB’s decision to hold rates.

Shares of Standard Chartered fell around 10% on Thursday, after the British bank recorded downbeat earnings. Mercedes-Benz also posted a decline in earnings for the third quarter. Several other major companies, like BNP Paribas, Volvo Cars, Volkswagen and Carrefour, also released their quarterly results.

The global increase in bond yields still remains one of the major concerns for stock markets.

The STOXX Europe 600 Index fell 0.48% to close at 433.20 on Thursday, with most sectors settling in the negative zone in the session. Auto stocks dipped by more than 2.1% on weak results, while travel stocks declined by 1.3%.

London’s FTSE 100 fell 0.81% to close at 7,354.57, while Germany’s DAX 40 and France’s CAC 40 lost 1.08% and 0.38%, respectively.

What to watch: Investors await the release of economic reports on GDP growth rate and retail sales from Spain, and consumer confidence from France. Spain’s quarterly economic growth, which came in at 0.5% in the second quarter, is expected to ease to 0.3% in the third quarter.

Analysts expect Spain’s retail sales to rise by 0.1% in September, following a 0.4% increase in August. France’s consumer confidence, which declined to 83 in September, is projected to decline again to 82 in October.

Other Markets: US trading indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.76%, 1.18% and 1.89%, respectively.

The news shaping the markets

Russia’s lawmakers approved a record rise in military spending plans. The news sent the safe-haven US dollar index slightly higher this morning.

China’s industrial profits dipped 9.0% year-over-year to 5,411.99 billion yuan in the first nine months of year, exerting pressure on the CNY/USD forex pair.

Singapore’s private home prices rose by 0.8% during the third quarter, following a decline of 0.2% in the second quarter, sending the SGD/USD pair higher in forex trading this morning.

New Zealand’s ANZ Roy Morgan Consumer Confidence Index rose to 88.1 points in October, from 86.4 in the previous month, which lent support to the NZD/USD forex pair.

Australia’s final demand producer price index rose by 1.8% during the third quarter, compared to a 0.5% increase in the second quarter, which sent the AUD/USD pair higher in forex trading this morning.

What else to watch today

Italy’s business confidence, consumer confidence and industrial sales, Bank of Russia’s interest rate decision, Brazil’s value of outstanding loans, India’s foreign exchange reserves, Mexico’s balance of trade, Canada’s wholesale sales and Canada’s government budget value, as well as US Core PCE prices, personal income, personal spending, University of Michigan consumer sentiment and Baker Hughes crude oil rigs.