Australian shares have jumped for a second straight day, as US tech giants like Facebook reported strong results, which eased concerns about a global slowdown caused by the war in Ukraine, China's zero-COVID policy and aggressive interest rate hikes.
However, as inflation surges across the world, tech giants Amazon and Apple revealed the impact of higher cost and supply constraints on their quarterly earnings — causing their share price to tumble in after-hours trade on Wall Street.
The ASX 200 closed 1.1 per cent higher, at 7,435 points.
Overall, April was a volatile period for stock markets, and Australia's benchmark index has dropped by 0.9 per cent in the past month.
Lithium and electric battery stocks were among today's best performers, including Pilbara Minerals (+5.6pc) and Allkem (+4.1pc), along with Pointsbet (+10.7pc), Zip Co (+7.9pc), Nickel Mines (+7.4pc) and Paladin Energy (+6.5pc).
Shares of Ramsay Health Care fell 0.5 per cent, after the country's largest private hospital operator said its profit more than halved in the third quarter due to higher costs and disruptions from COVID-19 curbs.
ResMed shares fell 4.1 per cent, after it reported that higher freight and manufacturing costs have hurt its profit margins.
Kogan plunged 13.9 per cent after the online retailer revealed its sales had slowed down in the March quarter.
Australian dollar recovers
The Australian dollar rebounded from its three-month low on Friday.
It had jumped by 0.9 per cent to 71.6 US cents, by 4:25pm AEST.
However, the Australian dollar has dropped by around 4.3 per cent since the start of April, its largest monthly decline since December.
"Next week’s RBA [Reserve Bank] meeting remains front of mind, with a hike widely expected," said Commonwealth Bank senior economist Kristina Clifton.
"That is not our call, however. We expect the RBA to hike in June.
"At the April meeting Governor [Philip] Lowe stated that the RBA want to evaluate the latest wages and labour cost data before increasing interest rates.
Meanwhile, the local currency also jumped to 93.2 Japanese yen. This was after the Bank of Japan (BoJ) vowed to keep buying unlimited amounts of 10-year bonds daily to defend its yield target.
The BoJ's decision to keep stimulating Japan's economy and keeping interest rates low drove the yen to a 20-year low (against the US greenback).
It also pushed the US dollar index to its highest level since 2002.
China and Ukraine overshadow Apple's strong results
After Wall Street ended its trading day, Apple announced its highest ever quarterly profit and sales — but gave a disappointing forecast.
In a conference call on Thursday (local time), Apple's chief financial officer Luca Maestri spoke of supply constraints, silicon shortages, and problems with demand in China, which the company sees as its growth engine.
This sent its share price down 2.6 per cent in after-hours trade (despite a 4 per cent jump during the US trading session).
Mr Maestri said that supply chain issues could hurt Apple's sales by $US4 billion to $US8 billion in the June quarter — which would be a "substantially larger" hit compared to the previous quarter.
He added that the war in Ukraine affected revenue as Apple withdrew from Russia. He declined to specify an amount, but said the hit to sales would be greater in the current quarter.
Apple's total revenue in the March quarter came in at $US97.3 billion (an 8.6 per cent improvement on last year).
It made $US50.6 billion in sales revenue from worldwide iPhone sales (which was a 5.5 per cent increase from a year ago), $US10.4 billion from Mac computers (up 14.7 per cent since last year), and $US8.8 billion from wearables like Apple Watches, home speakers and accessories (up 12 per cent in the past year).
The company's Services segment — which includes the App Store, Apple Music, Apple TV+, iCloud and other subscription businesses — recorded a 17 per cent jump in sales, to $US19.8 billion.
However, iPad sales fell 2 per cent to $US7.65 billion due to supply-chain constraints.
In addition to its $US25 billion quarterly profit (or $US1.52 per share), Apple increased its dividend by 5 per cent (to $US0.23 per share).
Its board also approved a decision to buy back $US90 billion worth of shares from the market.
Amazon results disappoint as fuel costs surge
Amazon shares plunged by 9 per cent in after-hours trade, after the e-commerce giant delivered a disappointing quarter and outlook on Thursday (local time) as it was swamped by higher costs to run its warehouses and deliver packages to customers.
After a long-running surge in sales during the COVID-19 pandemic, Amazon is facing a litany of challenges.
The company's expenses swelled as it offered higher pay to attract workers. A fulfilment centre in New York City voted to create Amazon's first US union, a result the retailer is contesting.
Also, the higher price of fuel risks diminishing consumers' disposable income just as it is making delivery more expensive for Amazon, the world's biggest online retailer.
The company expects to lose as much as $US1 billion in operating income this quarter, or make as much as $US3 billion. That would be a steep fall compared to its an operating profit of $US7.7 billion in the same period last year.
Still, there were bright spots, like Amazon Web Services, the division that new CEO Andy Jassy ran before taking the company's top job last year. The unit increased revenue 37 per cent to $US18.4 billion, slightly ahead of analysts' estimates.
Amazon's net sales totalled $US116.4 billion in the March quarter, in line with analysts' expectations.
But overall, the retailer reported a loss of $US3.8 billion ($US7.56 per share), compared with a profit of $US8.1 billion (or $US15.79 per share) a year earlier.
That partly reflected a $US7.6 billion decline in the value of its stake in electric vehicle maker Rivian.
The company's chief financial officer Brian Olsavsky told reporters that the company had about $US6 billion in greater costs from a year earlier, including $US2 billion of inflationary pressures.
These ranged from higher wages to fuel costing 1.5 times what it did a year ago. Russia's invasion of Ukraine has contributed to higher prices, Mr Olsavsky told analysts.
Amazon is aiming to optimise transfers between warehouses to rein in expenses. It also is in the unusual position of having excess warehouse and transportation capacity — costing it about $US2 billion in the first quarter.
That means Amazon needs to fulfil more orders to justify the space, said Scott Mushkin, founder of research firm R5 Capital.
Amazon projected net sales will be between $US116 billion and $US121 billion for the June quarter. However, analysts were expecting $US125.5 billion, according to IBES data from Refinitiv.
US economy shrinks by 1.4 per cent
The US economy went backwards in the March quarter, with GDP dropping by an annualised rate of 1.4 per cent.
It comes at a time when US COVID-19 infections are surging again, the government's COVID-relief spending has dropped, and the Federal Reserve is about to embark on a series of aggressive interest rate hikes.
These latest figures from the US Commerce Department were a big surprise, as economists were actually expecting GDP to have increased by 1 per cent.
Instead it was the first decrease in GDP since the short and sharp COVID-19 recession in 2020 and was mostly driven by a wider trade deficit as imports surged, and a slowdown in the pace of inventory accumulation.
Meanwhile, oil prices rallied after reports that Germany is no longer opposed to an embargo on Russian oil, which could further tighten global supplies.
Brent crude futures jumped 2.2 per cent, to $US107.65 a barrel.
Spot gold gained 0.4 per cent, to $US1,894.13 an ounce.
Tech rebound drives US markets higher
Wall Street ended sharply higher on Thursday, local time, after a strong quarterly report from Meta Platforms boosted sentiment towards tech and growth stocks, which have fallen sharply in recent months.
Shares in Facebook's parent company surged 17.6 per cent, after the social network reported a larger-than-expected profit and rebounded from a drop in users.
The S&P 500 closed 2.5 per cent higher, at 4,288 points.
The Nasdaq gained 3.1 per cent, to 12,872, while the Dow Jones index rose 1.9 per cent, to 33,916.
Apple and Amazon also boosted US markets, after their shares jumped more than 4 per cent each during the US trading session.
However, Amazon's share price tumbled around 10 per cent after the closing bell. In after-hours trade, the company released a set of quarterly earnings that fell below the market's lofty expectations.
Investors have been dumping high-growth stocks for weeks, due to worries about inflation, rising interest rates and a potential economic slowdown.
Even with Thursday's strong gain, the tech-heavy Nasdaq was down almost 10 per cent in the month of April, on track for its deepest one-month decline since March 2020.
"When interest rates, the inflation path and what the Fed is going to do are so volatile, it just means that pricing every other asset is that much more difficult," said Zach Hill, head of Portfolio Strategy at Horizon Investments.
"We've [received] a lot of earnings data over the last couple days and weeks and, by and large — outside of a few particular cases— corporate America's underlying fundamentals have been relatively strong."
ABC/Reuters
