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Daily Market Review – 27 July 2015

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Daily Market Review – 27 July 2015

Jul 27 2015, 07.00am GMT


Will Amazon’s Profits Continue to Rise?



STOCK.com   Stocks

On Thursday, after Amazon.com Inc. (AMZN, +9.80%) reported 3rd quarter earnings, investors and analysts were surprised by the better than expected results. This boost was seen in the company’s cloud computing business and in their sales while added efficiencies were evident in their product fulfillment. Before you start celebrating though, analysts are now saying that the increase in Amazon’s quarterly profit could be short lived. On Thursday, Amazon reported a profit of 19 cents a share which was well above the 13 cent loss per share forecast by analysts. In addition, revenue reported for the quarter beat expectations and this came partially as a result of the competitive pricing which is evident in Amazon’s cloud services business. The end result was a surge in the Amazon share price, up almost 17 percent in after-hours trading. This pushed Amazon’s market capitalization ahead of Wal-Mart’s, the retail giant. According to the newly appointed CFO of Amazon, Brian Olsavsky, the company will continue to focus on its AWS (Amazon Web Services) cloud-computing business. In addition, Olsavsky also stated that the company currently forecasts a profit of between $70 million in profit and $480 million in net loss for the current quarter. This would be up from the net loss of $544 million which Amazon reported in the same period a year ago. The part that has analysts weary regarding Amazon’s ability to beat expectations is the company’s spending habits. According to Olsavsky, the company plans to invest more in its fulfillment centers in preparation for the holiday season as well as to invest in additional original content for its Amazon Prime streaming-video offerings. Other products we could possibly see from Amazon in the near future are the launch of new Kindle devices. The big question now is can Amazon continue their winning streak or will the company’s spending plans for the quarter push them to another losing quarter? Amazon is currently trading at $529.42 a share.

STOCK.com   Indices

On Friday, U.S. stocks traded lower which marked the 4th straight session of declines. As a result, the main indices closed the week with the biggest weekly losses in months. Over the week, the market was negatively impacted by poor earnings results which came from companies such as IBM (IBM, -1.22%), Apple Inc. (AAPL, -0.53%) as well as Caterpillar (CAT, -1.01%). Adding to this decline was also a selloff in commodities which prompted investor concerns regarding the strength of the U.S. economy. At the close of trading, the Nasdaq Composite index (COMP) declined 1.1%, or 57.78 points, to 5,088.63. For the week, the tech heavy index declined 2.3%, retreating from its record closing level which it set on Monday. In addition, the S&P 500 index (SPX) closed Friday’s trading session down 1.1%, or 22.50 points, at 2,079.65. This decline marked the index’s steepest since March, while the index also declined 2.2% for the week. The poorest performers on the SPX were materials stocks which saw a decline of 5.5 percent over the week, while energy stocks followed close behind with a weekly decline of 4.1%. Following the downward trend was the Dow Jones Industrial Average (DJIA) which declined 0.9%, or 163.39 points, to 17,568.53. The blue chip index recorded a weekly loss of 2.9%.

STOCK.com   Currencies.

On Friday, the U.S. dollar (USD) pared gains against other currencies. This came after poor data was released on new home sales in the U.S. which prompted negative sentiment among investors. According to the report, in the month of June, new homes sales in the country rose by 482.000. This missed expectations for an increase of 546.000, while in May, new home sales rose by 517.000. In a separate report, Markit reported that its flash manufacturing PMI (purchasing managers' index) rose from 53.6 in June to 53.8 in July. This beat expectations for an unchanged reading. The EUR/USD traded at 1.0958, down 0.24% while the GBP/USD held steady at 1.5503. The Japanese yen and the Swiss franc also traded steady against the greenback with USD/JPY at 123.85 and with USD/CHF at 0.9603. The U.S. dollar also traded higher than the Canadian dollar with the USD/CAD up 0.30% and trading at an 11-year peak of 1.3074. Meanwhile, the U.S. dollar index was at 97.48, up 0.20%.

STOCK.com   Commodities

In Asian trading on Monday, crude oil prices declined. This came as investor’ concerns regarding the global supply glut as well as demand prospects out of the U.S. were evident. WTI crude oil for delivery in September traded at $48.04 a barrel, down 0.21%. For the week, the New York traded oil futures declined 5.99%, or $2.97, which marked the 6th consecutive weekly loss for the commodity. Meanwhile on Friday, Baker Hughes reported that the number of rigs drilling for oil in the U.S. increased to 659, up 21. This marked the highest number since May. Also, Brent crude oil for September delivery traded at $54.62 a barrel, down 1.18%, or $0.65, on the ICE Futures Exchange in London.

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