Alphabet, Microsoft earnings show hefty AI bets are driving growth

Good Morning,

Stocks rallied globally this week on positive earnings, with the S&P 500 on track for gains despite bond yield worries. Investors in the US are watching earnings to assess the economy's health.

Let’s jump in!

Before The Bell

Markets

• The S&P 500 rebounded after a losing streak, buoyed by positive earnings reports from companies. Analysts expect overall earnings for the S&P 500 to be up 3.7% compared to last year. (TRP)

• European stocks rose across the board after a three-week slump. Easing tensions in the Middle East and positive corporate earnings boosted investor sentiment. The FTSE 100 even reached new all-time highs. (TRP)

• Joining the global rally, Chinese stocks climbed on investor optimism about the Chinese economy. The Hang Seng Index in Hong Kong led the surge, jumping a significant 8.8%. The mainland Chinese indexes, the Shanghai Composite and CSI 300, also gained ground. (TRP)

Earnings & Data

• ILT’s annual revenue highest-ever, profit down (Stuff)

• Robust earnings from corporate America will put the S&P 500 Index out of its latest morass, despite rising concerns about a significant jump in bond yields, according to Bloomberg’s latest Markets Live Pulse survey. (BBG).

• Investors are waiting to see if earnings will meet the lofty expectations for artificial intelligence this week when about 180 companies in the S&P 500 are due to report their results. (BBG).

• Italian energy contractor Saipem said on Monday its first-quarter adjusted core earnings rose 40% on the same period of last year. (RT).

• Wall Street stocks ended higher on Monday following a market sell-off in previous sessions as investors eyed a busy week for quarterly results from key companies that would provide a glimpse of the U.S. economy's health. (RT).

• Profit growth momentum of the so-called Big Six technology stocks could "collapse" over the next few quarters, UBS Global Research strategists said on Monday, downgrading its rating on the mega-cap companies. (RT).

• Swedish automaker Volvo Cars on Wednesday reported an uptick in first-quarter core operating profits driven by strong retail sales. (CNBC)

• Comcast tops revenue estimates on streaming growth, strong park attendance (RT)

• Alphabet announced its first-ever dividend on Thursday and a US$70 billion (NZ$119b) stock buybuck, cheering investors who sent the stock surging nearly 16 percent after the bell. (RNZ)

• Microsoft beat estimates for third-quarter revenue at US$61.9 billion on Thursday, driven by gains from adoption of AI across its cloud services, and the company's shares jumped more than 4 per cent in extended trade with earnings per share being $2.94. (RT)

• Rubrik Inc. rose 16% in its trading debut after the cloud and data security startup backed by Microsoft Corp. topped its fundraising goal with a $752 million IPO. (BBG)

News Summary

Monday

• ‘Boardroom politics’ cited as large Fonterra supplier folds (NBR)

• Air New Zealand set to increase domestic airfares (Stuff)

• Global defence budget jumps to record high of $2440bn (Guardian)

Tuesday

• Farming, mining and other industrial regulations are being scrapped or amended under the government's first changes to the Resource Management Act. (RNZ).

  A woman who bragged she would “make history as one of the biggest scammers in New Zealand” has been convicted on five charges. (Stuff)

  A homicide investigation has been launched into the death of a man in the South Taranaki town of Hāwera on Monday night. (Stuff).

Wednesday

• A leading GP who wrote thousands of prescriptions for ADHD medication without specialist approval has been suspended and ordered to more than $175,000 in costs and a fine. (Herald)

• Prime Minister Christopher Luxon announced the surprise reshuffle this afternoon, confirming Lee would be stripped of the portfolio and demoted from Cabinet. (Herald)

• Trump trial: hush money was ‘election fraud pure and simple’, prosecutors say. (Guardian).

Thursday

• Christopher Luxon shows how he ‘rolls’, Chris Hipkins says he would go further (Stuff)

• Woodside to pay $18b for hydrocarbon projects despite climate rebuke (AFR)

• Meta’s plans to spend billions on AI unsettle investors (AFR)

Friday

• Consumer optimism plummets in Wellington. (RNZ)

• Bitcoin price remains stable after halving. (RNZ)

• Anglo American rejects BHP’s $60b bid on Friday. (AFR)

Weekend

• Two rescued in Auckland after boat capsizes (Stuff)

• Profit of $4804: how Musk’s takeover crushed Twitter in Australia (AFR)

• Alphabet, Microsoft earnings show hefty AI bets are driving growth (RT)

Deal Flow

Investments / M&A

Australia & New Zealand

• It turns out APM wasn’t so ‘disappointed’ in MDP’s bid after all (AFR)

• Telstra mulls strategic review of its massive health portfolio (AFR)

• Aussies are reporting a strange phenomenon occurring on Kmart shelves just months after Target began selling the store’s popular Anko range as part of a $10 billion merger. (NCA).

• ASX-listed Nick Scali Limited has agreed terms to acquire the United Kingdom’s Anglia Home Furnishings – which trades as Fabb Furniture – and will go cap in hands to investors on Wednesday to fund the deal. (AFR)

• Aussies are reporting a strange phenomenon occurring on Kmart shelves just months after Target began selling the store’s popular Anko range as part of a $10 billion merger. (NCA).

• Joint venture partners Island Green Power and Overland Sun Farming have tapped boutique Acton Advisory to sell 100 per cent of its Hay Sun Farm solar project, which aims to be up and running by 2025. (AFR)

Key Global

• BHP lobs $60b copper play for Anglo American (AFR)

Other Global

• Blackstone tops Concord's bid for Shakira music owner Hipgnosis (RT)

• Romania’s largest bank said it’s likely to slow a buying spree in the Black Sea country after clinching a deal to acquire the local unit of Hungary’s OTP Bank Nyrt. (BBG)

• Private equity fund L Catterton, which is backed by luxury giant LMH, agreed to buy a majority stake in Italian beauty brand Kiko. (BBG)

VC & Fundraising

• Just 4 per cent of the total $3.5 billion in venture capital funding in 2023 went to 100 per cent female-founded business. (RGR).

• Global law firm K&L Gates has acted as fund counsel in connection with the establishment of the W23 Global Fund, LP (W23 Global), a global grocery retail venture capital fund. (KL).

• A new fund that allows shareholders access to privately owned technology companies has sent investors on a wild ride in recent weeks while eliciting criticism from the likes of Morningstar and competitor ARK Investment Management. (RT)

Equity Raises

Australia & New Zealand

• ASX-listed precious metals explorer, Santana Minerals, has raised A$31.2m through the issue of approximately 27.1 million ordinary shares to fund the development of its Bendigo Ophir Project in New Zealand. (NBR)

• Farmer-owned red meat co-op Alliance Group is looking to raise between $100m and $150m in capital over the next two to three years. (NBR)

Debt, Restructuring & Bankruptcy

• Countries such as Sri Lanka are accepting their 17th IMF bailout packages is a stark illustration of how ineffective existing strategies are at breaking the cycle. (Guardian)

• Gulf Harbour Country Club faces liquidation amid $48m debt. (NBR)

• NZ film production firm Stripe Studios (Comedy) Ltd owes $2.25m, including more than $600,000 to US comedian and actress - liquidator’s report. (Herald)

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