Amazon's Cloud Growth Disappoints, But Ad Sales Shine

Local Market Commentary

The local bourse was closed yesterday due to a public holiday. All local data, including prices and percentage changes, reflect Wednesday’s trading session. Looking back to Tuesday, the Top 40 closed up 0.30% at 84,225.99 points, while the All Share also gained 0.30%, ending at 91,583.39 points — continuing their run into all-time high territory.

European Market Commentary

The FTSE 100 ended flat on Thursday as investors digested a mixed set of corporate earnings while remaining cautiously optimistic about easing trade tensions between the US and China. Mortgage borrowing in the UK surged by £12.96 billion in March—its largest increase since June 2021—as homebuyers rushed to benefit from a tax break. However, Bank of England data also signalled consumer caution. With the outlook for global growth clouded by US tariffs, markets now widely expect the BoE to reduce interest rates by 25 basis points on 8 May, with some analysts suggesting it may need to accelerate its current pace of cuts.

U.S. Market Commentary

Wall Street extended its winning streak on Thursday, with the Dow and S&P 500 both notching their eighth consecutive session of gains. Robust earnings from Microsoft and Meta helped ease concerns about the pace of artificial intelligence investment. Economic indicators were mixed—weekly jobless claims rose more than expected, suggesting a potential increase in layoffs linked to trade disruptions, while ISM data revealed ongoing contraction in manufacturing, albeit at a slower pace than forecast. Elevated input prices also added to inflationary concerns. Meanwhile, data released on Wednesday confirmed the US economy contracted last quarter for the first time in three years.

Asia Market Commentary

Asia-Pacific equities advanced after China indicated its willingness to explore trade negotiations with the US, lifting sentiment across the region. Markets were also buoyed by gains on Wall Street, as investors grew more confident that a global slowdown would not derail progress in AI-related sectors. In Japan, unemployment ticked up to 2.5% in March—slightly above expectations—reflecting growing economic uncertainty. Meanwhile, South Korea’s inflation held steady at 2.1% year-on-year in April, slightly exceeding forecasts, as rising food, clothing, and education costs persisted. The data may give the Bank of Korea scope to consider rate cuts at its next policy meeting.

Currency Market Commentary

The US dollar was on track for its third consecutive weekly gain, buoyed by improving US economic data and signs of progress in trade talks. The British pound remained steady against the dollar, hovering near a three-year high earlier this week, as investors reduced exposure to the greenback amid tariff-driven uncertainties. A survey released on Thursday showed UK manufacturing contracted for a seventh straight month in April, underscoring the drag from both US tariffs and domestic tax pressures on employers.

Commodity Market Commentary

Gold prices were set for their worst weekly loss in over two months, as easing trade tensions reduced demand for safe-haven assets. Attention has now shifted to the upcoming US non-farm payrolls data. Oil prices firmed in early Asian trading on Friday after China signalled openness to dialogue with the US, reviving hopes for a resolution to their protracted trade conflict. Although recent concerns about slowing global demand and impending OPEC+ supply increases have weighed on crude, signs of de-escalation and potential US sanctions on Iranian oil buyers lent support to prices.

Glencore plc (GLN) -8.60%

Glencore delivered a mixed production update for Q1 2025, as copper output slumped 30% year-on-year to 167,900 tonnes due to weaker mining rates and recoveries, while cobalt surged 44% to 9,500 tonnes on improved Mutanda volumes. Zinc rose 4% to 213,600 tonnes, helped by strong grades at Antamina and Australian support. Nickel output held steady at 18,800 tonnes when adjusting for Koniambo’s care and maintenance. Ferrochrome declined 7% to 277,000 tonnes, reflecting deliberate scaling in soft market conditions. Steelmaking coal rose to 8.3 million tonnes, largely from the EVR acquisition, with Australia up 21%, while energy coal fell 7% to 23.4 million tonnes due to planned closures. Broader UK macro data showed ongoing manufacturing contraction and a firm pound amid US-driven dollar softness.

Oceana Group Limited (OCE) +0.58%

Oceana has issued a further trading statement confirming a steep drop in interim earnings, guiding EPS and HEPS for H1 2025 between 300 and 350 cents – down 40% to 49% and 40% to 48% respectively from the prior period. This aligns with earlier updates from February and March highlighting operational and market pressures. Final results for the six months to 31 March 2025 are expected around 9 June.

Brait PLC (BAT) +10.26%

Brait’s latest trading update underscores steady operational progress across key holdings. Virgin Active posted 13% year-on-year revenue growth on the back of strong membership gains in Italy and the UK, offsetting softer growth in South Africa and Australia, with annualised EBITDA at GBP119 million. Premier is set to deliver 20%–30% HEPS growth for FY2025, supported by cost control and efficiency gains despite economic headwinds. Brait reaffirmed support for New Look’s £30 million digital push while opting out of the capital raise, consistent with its asset realisation focus and retention of board and shareholder rights.

Amazon.com Inc. (AMZN) +3.13%

Amazon reported Q1 cloud revenue growth of 16.9% to $29.27 billion, falling short of the expected 17.4% growth and $30.9 billion in sales. Operating income guidance for Q2—ranging from $13 billion to $17.5 billion—also missed the $17.7 billion consensus. CEO Andy Jassy downplayed concerns around tariffs, noting no material rise in average retail prices yet, though certain categories saw pre-emptive stockpiling. Revenue from third-party seller services grew just 7%, excluding FX effects. Total Q1 revenue came in at $155.7 billion, slightly above the $155.04 billion estimate, while Q2 sales guidance of $159–$164 billion exceeded the $160.91 billion forecast. Online ad sales rose 19% to $13.92 billion, beating estimates, reinforcing Amazon’s position behind only Meta and Alphabet in the digital ad market.

Mastercard Inc. (MA) -0.26%

Mastercard reported Q1 earnings of $3.73 per share, ahead of the $3.57 consensus, as consumer spending on its card network remained resilient despite tariff-related uncertainty. Cross-border volumes rose 15%, indicating strong international transaction activity. The firm's value-added services and solutions division—now accounting for over a third of total revenue—delivered 18% revenue growth, driven by demand for offerings like threat intelligence and fraud prevention. The results, marking the end of the earnings season for card issuers, provided insight into the continued strength of US consumer activity.

Airbnb Inc. (ABNB) +1.71%

Airbnb projected Q2 revenue of $2.99–$3.05 billion, with the midpoint slightly below analyst expectations of $3.04 billion, as softening U.S. demand weighs on growth amid ongoing trade policy uncertainty. Global bookings rose 8% year-on-year in Q1 to 143.1 million, with 11% growth outside North America. The U.S., representing the bulk of its North American business, accounts for around 30% of total nights booked. Airbnb anticipates flat average daily rates and a slight decline in core profit margins in Q2, with a moderation in bookings growth from the previous quarter. Q1 revenue increased 6% to $2.27 billion, marginally ahead of estimates, while net income fell 41.7% to $154 million, impacted by increased headcount, investment write-downs, and lower interest income.

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