Tech giants fail to deliver on earnings: Biotechs finding support

27Oct

Tech giants fail to deliver on earnings: Biotechs finding support

 

The Nasdaq and S&P 500 slid Wednesday as traders assessed disappointing earnings from tech giants Microsoft and Alphabet. The Nasdaq has now lost over 29 percent of its value this year, versus a 19 percent decline in the broad-based S&P 500. Technology companies of course were some of the biggest winners during COVID. The tech sector accounts for more than a quarter of the S&P 500 index, giving it an outsize influence on the market as a whole. Alphabet, Amazon, Apple and Microsoft together account for nearly a fifth of the index’s value.

Overnight the Nasdaq dropped 2 per cent. The S&P 500 lost 0.7 per cent. The 30-stock Dow Jones Industrial average traded flat.

Earlier in the day, the Dow rallied more than 300 points as Visa buoyed the index on strong earnings. The S&P 500 was also positive.

The swings in the major indexes reflect a “tug of war” between corporate America and the Federal Reserve that has left investors attempting to balance what companies are reporting and what that means for future interest rate hikes.

Shares of Google-parent Alphabet dropped 9 per cent after the tech giant missed expectations on the top and bottom lines. Alphabet also reported a decline in YouTube ad revenue, which spurred investors to deliberate the outlook for other tech companies that rely on ad spending.

Meanwhile, Microsoft declined about 7 per cent after the tech giant reported weaker-than-expected cloud revenue in its latest quarterly results, despite beating earnings and revenue estimates. The company also issued current-quarter revenue guidance that fell short of expectations.

Meta Platforms reported results were in line but the stock still fell 5 per cent, alongside Atalassian which was down 5 per cent and Amazon lost 4 per cent.

Across the sectors, Utilities and real estate traded slightly negative late in the day. They joined consumer discretionary, communication services and technology in the red.

Within the sectors of note is the performance of the biotech stocks over the last 18 months in particular post the COVID related boom . Biotechs soared during the pandemic. With non-specialist investors and hedge funds piling in, pushing up valuations and funding large swaths of start-ups.

With a broad based 40 per cent pull back in the NASDAQ biotech index, investors are looking at cheap valuations supported by positive data. And while biotech deals like IPO’s and capital raisings have fallen off a cliff, big pharma is currently sitting on a $300bn war chest.

The conditions now appear ripe for an M&A boom: as biotechs are usually bought out by big pharma who have the financial muscle to fund large phase 3 clinical trials and commercialise successful treatments.

On the currency front, one Australian dollar has strengthened compared to the US dollar yesterday, buying 64.92 US cents (Wed: 63.95 US cents), 55.85 Pence Sterling, 95.03 Yen and 64.41 Euro cents.

Now to Commodities the Iron ore futures are pointing to a 1 per cent fall.

Gold gained 0.7 per cent. Silver added 0.7 per cent. Copper jumped 4.3 per cent and Oil gained 3.3 per cent.

The SPI futures are pointing to a 0.4 per cent gain. 

Figures around the globe

Across the Atlantic, European markets closed higher. Paris gained 0.4 per cent, Frankfurt added 1.1 per cent and London’s FTSE closed 0.6 per cent higher.

In Asian markets, Tokyo’s Nikkei added 0.7 per cent, Hong Kong’s Hang Seng gained 1 per cent and China’s Shanghai Composite closed 0.8 per cent higher.

Yesterday, the Australian sharemarket added 0.2 per cent to close at 6811.

Ex-dividends

Acrow Formwork (ASX:ACF) is paying 1.5 cents 60 per cent franked
Bank of Queensland (ASX:BOQ) is paying 24 cents fully franked
Genusplus Group (ASX:GNP) is paying 1.8 cents fully franked
Tribune Resources (ASX:TBR) is paying 20 cents fully franked

Dividends payable

360 Capital REIT (ASX:TOT)
Austin Engineering (ASX:ANG)
Australian Unity Office Fund (ASX:AOF)
Clime Investment Management (ASX:CIW)
Ridley Corp (ASX:RIC)
Turners Automotive Group (ASX:TRA)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network


Source: Finance News Network

Share this post

Related Posts

07May

Tech shares tumble as Yellen raises tremors on a rate hike: ASX to fall

05 May 2021 - The ASX is to drop at the open following a mixed lead from Wall St. Nearmap (ASX:NEA) has increased its full-year guidance by 20-26 per cent for its annual contract value. Morgan Stanley upgrades Spark infrastructure (ASX:SKI) as an add.

Read More
21Jan

Joe Biden is sworn in as 46th President of the USA: ASX set to open higher

21 Jan 2021 - Following a lift on US markets overnight, the ASX looks set to open higher this morning. Donald Trump's presidency came to an end in the early hours of this morning when Joe Biden was sworn in as the 46th President of the United States. China's December coal imports from Australia were zero due to import restrictions. Pilbara Minerals (ASX:PLS) has completed the acquisition of Meridian Energy following cash payment of $201 million.

Read More
18Mar

Collins Foods (ASX:CKF) KFC close in-dining: Aus shares 3.6% lower at noon

18 Mar 2020 - The Australian share market opened lower this morning tracking 3.6 per cent lower at noon, following continued economic uncertainty. Collins Foods’ (ASX:CKF) KFC have closed all in-dining areas across the country.

Read More
17Aug

Aus shares to drop at the open on the back of mixed overseas leads: reporting season ramps up

17 Aug 2020 - Australian shares are set to drop at the open, taking direction from losses in Europe and lacklustre trading in the US. Wall Street was mixed retail sales in July fell short of forecasts, production met expectations. Shares in chip maker Applied Materials rose 3.9 per cent after it forecast fourth-quarter revenue above analyst estimates. Investors are also concerned over stalled coronavirus stimulus negotiations and simmering US-China tensions.

Read More
16Jan

Dow closes above 29k for first time: Aus shares to open higher

16 Jan 2020 - The Australian share market is set to open higher this morning after the US and China sign trade deal. Turners Automotive Group (ASX:TRA) to launch Carly vehicle subscription service in New Zealand.

Read More
24Dec

S&P 500 closes at record highs on Wall St rally, Link rated as Hold: ASX to rise

24 Dec 2021 - Wall St surges for 3rd day on a holiday shortened week amid fresh inflation data and rate hike expectations. Morgans rates Link Administration (ASX:LNK). ASX closes at 2.10pm EST today.

Read More
19Nov

Wall St closes little changed: Aus shares to open flat

19 Nov 2019 - The local sharemarket is poised to open flat following a quiet session on Wall Street on Monday. In the US stocks reached fresh records but pared back to close the session little changed. The technology sector posted some of the bigger gains while energy stocks pulled back as crude oil fell. Synlait (ASX:SM1) and The a2 Milk Company have extended their supply agreement to 2025.

Read More
13Aug

Wall St advances: Aus shares to open in the green

13 Aug 2020 - US markets closed on a positive foot overnight as the S&P 500 approached a near all-time high, and the Australian share market looks set to open in the green today. On Wall Street, major tech stocks advanced, all up more than 1.5% and US bond yields rose. Seek (ASX:SEK) reported a full-year loss of $111 million and EBITDA declined 9 per cent, these results impacted by the current Covid environment.

Read More
09Sep

Wall Street sees a huge late tech sell-off: ASX set to open lower

09 Sep 2020 - The ASX looks set to open lower this morning as tech stocks drove the US markets lower. Tesla shares plunged yesterday - their worst one-day loss since March. AstraZeneca shares fell over 6% in after-hours trading yesterday after the company said its late-stage trial for a potential coronavirus vaccine had been put on hold due to safety concerns. The Australian dollar dropped as the US dollar strengthened to a four week high. The a2 Milk...

Read More
27May

The big four banks see a huge rally: ASX closes 0.1% lower

27 May 2020 - After a rise after mid-morning trade the ASX took an afternoon slump and closed 0.1% lower. Banks saw a rally today. The ANZ (ASX:ANZ), NAB (ASX:NAB) and Westpac (ASX:WBC) all closed around 8%. Saracen Mineral Holdings (ASX:SAR) shares saw a decline today. Director Raleigh Finlayson has sold 500,000 shares in the company. Resimac Group (ASX:RMC) is pleased to confirm it has priced a $500 million prime Residential Mortgage-Backed Security (RMBS) transaction.

Read More