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What’s happening: Shares of Meta Platforms surged in after-hours trading on Wednesday, following the release of the company’s second-quarter results.
What happened: The Facebook parent reported upbeat quarterly results, driven by strong growth in advertising revenues.
Meta also issued an encouraging revenue outlook for the third quarter.
How were the results: The Menlo Park, California-based company reported low double-digit growth in its top-line figures for the quarter ended June 30.
Why it matters: Meta’s quarterly report came a day after Alphabet posted strong results, signalling continued spending by consumers and advertisers despite the ongoing economic issues.
Meta is recovering from the challenges it faced last year, which forces the company to reduce its workforce by approximately 21,000 employees.
Ad revenues at the company surged 12% in the second quarter, better than the 3% ad revenue growth recorded at Google. Meta said its ads delivered climbed 34% year-over-year, while average price per ad declined by 16%.
Daily active people using Meta’s family of products rose 7% year-over-year to 3.07 billion during the second quarter, while family monthly active people came in at 3.88 billion, representing 6% growth.
Facebook’s daily active users rose 5% year-over-year to 2.06 billion, while monthly active users increased 3% to 3.03 billion in the quarter.
Meta’s Reality Labs unit recorded sales of $276 million, down from $452 million in the year-ago quarter. The unit lost $3.7 billion during the second quarter, losing more than $40 billion since 2021.
Meta repurchased $793 million in shares during the quarter, and closed the quarter with cash worth $53.45 billion and long-term debt of $18.38 billion.
CEO Mark Zuckerberg said the company had an “exciting roadmap…with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall.”
Management guided to third-quarter revenues of $32 billion to $34.5 billion, higher than market expectations of $28.29 billion.
How shares responded: Meta’s shares jumped 6.9% to close at $319.15 in extended trading on Wednesday, following the release of quarterly earnings. The stock has added around 97% over the past six months.
What to watch: Investors will watch the company’s investments in AI and Metaverse, which are expected to significantly impact its overall results ahead.
Context: Gold prices moved higher on Wednesday, amid a decline in Treasury yields and the US dollar.
Details: Gold prices settled higher on Wednesday mainly due to weakness in the US dollar and a decline in Treasury yields. The safe-haven metal was also supported by the US Federal Reserve’s policy decision.
As widely expected, the US Fed raised its benchmark interest rate by 25 basis points to a range of 5.25%-5.5%, taking borrowing costs to the highest in 22 years.
Gold futures for August delivery rose $6.40, or 0.3%, to close at $1,970.10 per ounce on Wednesday, before the release of the Fed’s interest-rate decision. Shortly after the Fed’s announcement, August contracts for the yellow metal rose to $1,971.20 an ounce in electronic trading.
The Fed’s rate decision exerted pressure on the US dollar. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell 0.2% to 101.19, while the yield on the 10-year Treasury fell to 3.8895%, from 3.911% on Tuesday.
In other metals trading, silver futures for September delivery rose 0.6% to settle at $24.97 per ounce on Wednesday. October platinum fell 0.5% to $972 per ounce, while palladium for September delivery declined by 2% to $1,255.90 per ounce and September copper declined 0.3% to $3.90 per pound.
What are expectations: Traders await the European Central Bank’s interest rate decision, scheduled to be announced today. The ECB is widely expected to raise interest rates by 25 basis points. Markets will also watch major economic releases from the US.
Other Markets: European indices closed lower on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.19%, 0.49%, 1.35% and 0.53%, respectively.
North Korea’s Defense Minister Kang Sun Nam expressed his support of Russia’s right to “defend the sovereignty and security of the country.” The news sent the safe-haven US dollar index slightly lower this morning.
China’s industrial profits fell by 16.8% year-over-year to 3,388.46 billion yuan during the first six months of 2023. This being lower than the 18.8 % decline recorded in the previous period lent support to the CNY/USD forex pair.
Australia’s import prices declined by 0.8% during the three months to June. This being lower than the previous quarter’s 4.2% decline sent the AUD/USD pair higher in forex trading this morning.
The Hong Kong Monetary Authority increased the base rate by 25bps to 5.75% at its latest meeting, lending support to the HKD/USD forex pair.
UK’s car production surged 16.2% year-over-year to 84,767 units in June. This marked the fifth month of growth in a row and sent the GBP/USD pair higher in forex trading this morning.
Germany’s GfK consumer climate indicator, Spain’s jobless rate and retail sales, Italy’s consumer confidence and business confidence, South Africa’s producer price inflation, UK’s CBI distributive trades, Canada’s CFIB business barometer long-term optimism index and average weekly earnings, Turkey’s foreign exchange reserves and MPC meeting summary, Brazil’s producer price inflation and net payrolls, Mexico’s balance of trade and unemployment rate, US durable goods orders, GDP growth rate, goods trade balance, wholesale inventories, initial jobless claims, continuing jobless claims, core price index for personal consumption expenditures, pending home sales, natural gas stocks change and Kansas City Fed’s manufacturing production index, Argentina’s consumer confidence, as well as India’s money supply M3.
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