Magnificent earnings stir rally on Wall St, Europe

Stocks on Wall Street and in Europe rallied into the end of April as monster earnings from Microsoft, Alphabet, Meta Platforms and Amazon shifted the focus back to a strong corporate reporting season for the first three months of the year.

Oil prices eased from their highs as the stalemate in the Middle East continues, with US President Donald Trump said to be briefed on potential military action in Iran, while odds on a peace being brokered in the next couple of months shortened.

Meanwhile, the yen surged as the Japanese government and Bank of Japan intervened in foreign exchange markets as the energy shock threatened to widen the nation’s trade deficit.

And the local focus will be on first-half earnings from ANZ Group Holdings as three of Australia’s big four banks prepare to report in what’s shaping up to be a strong opening to the trading day for the ASX.

Impressive earnings

Stocks in the US and Europe headed into the end of April on a strong note as reports from four of the Magnificent 7 cohort posted strong quarterly earnings, with Google-owner Alphabet the pick of the megcaps as it catches up with the early leaders in the artificial intelligence race, with the stock surging 9.1%.

Meta tumbled 7.7% as investors looked past its revenue growth to the Facebook owner’s increased capital spending, while Microsoft dipped despite beating analysts’ expectations and Amazon nudged higher on its cloud computing growth. Apple is due to report after the bell on Thursday in the US.

Caterpillar led the Dow Jones Industrial Average higher, jumping 10% as demand for AI data centres buoyed its outlook, and Eli Lilly & Co rallied as growing sales of weight-loss drugs underpinned its revenue gains.

The Dow was up 1.8% in late trading, while the S&P 500 advanced 1.1% and the Nasdaq Composite increased 0.9%.

European stock markets were similarly stronger, with the UK’s FTSE 100 up 1.6% and Germany’s DAX gaining 1.4%, while France’s CAC 40 increased 0.5%.

The European Central Bank and Bank of England kept their respective benchmark interest rates on hold, with both waiting to see how the Middle East conflict unfolds.

Still waiting

Brent crude oil futures on a June contract fell 3.5% to US$113.95 a barrel at 7am in Auckland as the Middle East stalemate continues, with Axios reporting that US President Trump was due to be briefed on options for potential military action in Iran. The Polymarket prediction market is pricing in a 20% chance of a permanent peace deal being brokered by the end of May and a 32% chance by the end of June.

“Prices have since plunged to US$114, albeit that reflects the expiring of the active futures contract, with little appetite for speculators holding the contract to convert into physical delivery,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “Brent dated, which measures the price for near-term physical delivery, isn’t affected by the futures roll, and is down only slightly for the day and sits around US$123 per barrel.”

The kiwi dollar climbed to 59.08 US cents at 7am from 58.32 cents against a broadly weaker greenback after Japan bought yen and sold US dollars to firm up its own currency. The kiwi dropped to 92.39 yen from 93.60 yen.

“However, with the BoJ’s super-easy policy stance being a key force behind repeated yen weakness, the stronger yen is only likely a temporary reprieve that shakes out speculative positions,” BNZ’s Wong said.

Australian futures are pointing to a 1.5% gain for the S&P/ASX 200 index when trading opens across the Tasman. The ASX200 climbed 2.2% in April, while New Zealand’s S&P/NZX 50 index dipped 0.1%.

ANZ is the first of three major Australian banks due to report over the coming week, with results also due from ASX-listed supermarket chain Coles Group and Fisher & Paykel Healthcare rival, Resmed.

Local data today include Statistics New Zealand’s building consents figures for March and the ANZ-Roy Morgan consumer confidence survey.

Reporting by Paul McBeth. Image from Jimmy Woo on Unsplash.