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Amazon Earnings Disappoint
Information is not investment advice
The world’s biggest e-commerce retailer on Thursday reported sales and gave a forecast that fell short of expectations. Shares declined by about 7% in the extended trading after the results were released. It marked the first time Amazon had missed quarterly sales estimates since 2018.
To be honest, this shouldn’t be a surprise. Amazon emerged as the essential store for homebound shoppers during the coronavirus pandemic, propelling its sales and profits to new highs. Now, the rush online is slowing down as vaccinated consumers peel away from computers and smartphones and revert to old habits like traveling and dining out.
Q2 sales increased 27% to $113.1 billion, missing the $115 billion estimated. While profit was $15.12 a share in the period ended June 30, compared with the average estimate of $12.28.
Nevertheless, Amazon is optimistic about the current quarter saying that revenue will be $106 billion to $112 billion in the period ending in September. Operating profit will be $2.5 billion to $6 billion. If so, this would cover the disappointment of Q2. With that being said, I would consider the current decline in Amazon as another price discount that many are waiting for.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.