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Facebook owner Meta Platforms saw its shares down heavily in extended trade after revenue forecasts disappointed. Some analysts are also now questioning the staggering amounts of money Meta is investing in artificial intelligence. Written by: Jeremy Naylor | Analyst, London Publication date: Thursday 25 April 2024 10:28 Earnings per share came in at $4.71, comfortably above estimates of $4.32 and revenues up 27% year-on-year, at $36.46bln, above the forecasts of $36.16bln. That was the fastest rate of revenue expansion for any quarter since 2021. However, shares have quite clearly been priced for perfection as the outlook, however strong it is, quite clearly disappointed the market. Q2 revenue is expected at $36.5 to $39bln with the midpoint at $37.75bln, which would represent 18% year-over-year growth, but below analysts' average estimates of $38.3bln. However, the company is also expected to invest between $30-37bln into AI, possibly as much as $40bln, which some said was too much given current engagement. (AI Video Summary) Meta Meta Platforms, the parent company of Facebook, experienced a significant stock drop post-market following its quarterly earnings report, despite beating earnings expectations with a share price of $4.71 against a forecast of $4.32, and posting revenues of $36.46 billion. Meta's aggressive investment in AI technology This drop was attributed to concerns over its aggressive investment in AI technology, with spending on AI expected to be between $30 to $40 billion. Despite initial investor trepidation, there's notable buying interest in the stock at the lower prices, with 87% of clients holding long positions. The heavy investment in AI technology continues to spark debate among investors regarding the company’s future direction. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary. -
Despite ECB rate cut forecasts, the Euro climbs against the USD and GBP. US economic data could influence this uptrend. Source: Getty Forex Shares Euro Pound sterling EUR/GBP EUR/USD Written by: Nick Cawley | Analyst, DailyFX, London Publication date: Thursday 25 April 2024 06:37 The euro has gained against the US dollar and the British pound recently, even as markets anticipate a European Central Bank rate cut in June. However, any weakness in the US dollar could be temporary, as upcoming US Q1 GDP and core PCE data may support the view of sustained higher US interest rates. The daily EUR/USD chart shows the pair trading on either side of 1.0700 after rebounding from 1.0600 last week. The April 16th multi-month low coincided with a heavily oversold CCI reading which is now being erased. All three simple moving averages are above the spot price and in a negative pattern, while the pair has posted two major lower highs and lower lows since the end of last year. The next level of resistance is seen at 1.0787, while a confirmed break of 1.0600 will bring 1.0561 and 1.0448 into play. EUR/USD daily price chart Source: TradingView EUR/USD sentiment analysis: traders build net-shorts, prices may still fall Retail trader data shows 59.30% of traders are net-long with the ratio of traders long to short at 1.46 to 1.The number of traders net-long is 3.54% lower than yesterday and 16.77% lower than last week, while the number of traders net-short is 20.90% higher than yesterday and 35.35% higher than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse higher despite the fact traders remain net-long. EUR/GBP jumped last week after Bank of England (BoE) commentary that UK inflation is falling towards target. The BoE rate cut expectations were brought forward, weakening sterling against a range of currencies. EUR/GBP hit a multi-month high but partially retraced the move yesterday after the CCI indicator flashed a heavily overbought reading. In the short term, the recent double high around 0.8645 should act as resistance if the 200-day simple moving average is broken. The 0.8550 is currently guarded by both the 20- and 50-day SMAS. EUR/GBP: traders cut net-shorts on the week, prices may fall According to the latest retail trader data, 51.62% of traders are net-long on EUR/GBP, with a long-to-short ratio of 1.07 to 1. The number of net-long traders has increased by 22.75% compared to yesterday but decreased by 26.67% from last week. Conversely, the number of net-short traders has decreased by 15.19% since yesterday but increased by 61.45% from last week. The contrarian view to crowd sentiment suggests that EUR/GBP prices may continue to fall, despite the current mixed trading bias. EUR/GBP daily price chart Source: TradingView This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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Australia's CPI exceeded expectations at 3.5%, suggesting the RBA might keep rates steady, pushing AUD/USD up amid risk-on sentiment and ahead of US data. AUD/NZD shows bullish potential above key supports. Source: Getty Forex Market sentiment Inflation United States dollar AUD/NZD AUD/USD Written by: Richard Snow | Analyst, DailyFX, Johannesburg Publication date: Thursday 25 April 2024 07:15 Australian inflation eases less than anticipated in Q1 Monthly, quarterly and yearly inflation measures showed disappointing progress towards the Reserve Bank of Australia’s (RBA) target. The monthly CPI indicator for May rose to 3.5% versus the prior 3.4% to round off a disappointing quarter where the first three months of the year revealed a rise of 1%, trumping the 0.8% estimate and prior marker of 0.6%. Source: DailyFX Generally higher service cost pressures in the first quarter have made a notable contribution to the stubborn inflation data – something the RBA will most likely continue to warn against. The local interest rate is expected to remain higher for longer in part due to the sluggish inflation data, but also due to the labour market remaining tight. A strong labour market facilitates spending and consumption, preventing prices from declining at a desired pace. Markets now foresee no movement on the rate front this year with implied basis point moves all in positive territory for the remainder of the year. This is of course likely to evolve as data comes in but for now, the chances of a rate cut this year appear unlikely. Implied basis point changes in 2024 for each remaining RBA meeting Source: Refinitiv AUD/USD continues to benefit from the return to risk assets After escalation threats between Israel and Iran appeared to die down, markets returned to assets like the S&P 500 and the ‘high beta’ aussie dollar. AUD/USD subsequently reversed after tagging the 0.6365 level – the September 2022 spike low and surpassed 0.6460 with ease. Upside momentum appears to have found intra-day resistance at a noteworthy area of confluence resistance – the intersection of the 50 and 200-day simple moving averages (SMAs). The move could also be inspired by reports of Israel preparing to move on Hamas targets in Rafah, which could risks deflating the recent lift in risk sentiment. US GDP data tomorrow and PCE data on Friday still provide an opportunity for increased volatility and a potential USD comeback should both prints surprise to the upside, further reinforcing the higher for longer narrative that has reemerged. All things considered, AUD may be susceptible to a sifter end to the week. AUD/USD daily chart Source: TradingView AUD/NZD bullish continuation shows promise AUD/NZD entered into a period of consolidation as prices eased in the form of a bull flag pattern. After yesterday’s close, a bullish continuation appears on the cards for the pair despite today’s intraday pullback from the daily high. A move below 1.0885 suggests a failure of the bullish continuation but as long as prices hold above this marker, the longer-term bullish bias and the prospect of a bullish continuation remains constructive. One thing to keep in mind is the risk of a shorter-term pullback as the RSI approaches overbought once more. Upside target appears at 1.1052 (June 2023 high) and 1.0885 to the downside. AUD/NZD daily chart Source: TradingView This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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