While you were sleeping: Amazon, oil rally

Wednesday 11th May 2016

Equities on both sides of the Atlantic advanced with the price of commodities, while Amazon shares offered a boost as well.

Shares of Amazon rallied, trading 3.1 percent higher at US$700.51 as of 2.59 pm in New York, after touching a record high US$701.93 earlier in the session.

Sanford Bernstein Co analyst Carlos Kirjner raised his price target on Amazon’s stock to US$1,000, well above the consensus.

"We think Amazon's businesses are now so large, fast-growing, and profitable that it is harder and harder for the company to find new areas of investment to keep up with the growth in gross profits," Kiriner wrote, according to Bloomberg. "[T]ime is on the side of margin expansion."

Wall Street moved higher. In 3.04pm New York trading, the Dow Jones Industrial Average climbed 1.1 percent, as did the Nasdaq Composite Index. In 2.48pm trading, the Standard & Poor’s 500 Index also rallied 1.1 percent.

Gains in shares of Caterpillar and those of Goldman Sachs, last 2.5 percent and 2.4 percent higher respectively, led the advance in the Dow.

Shares of Allergan climbed, trading 4.4 percent higher as of 3.18pm in New York, after the maker of Botox posted a quarterly profit that exceeded expectations. Last month Pfizer and Allergan abandoned their US$160 billion merger plans.

"With this highly controversial quarter now in the rear view mirror, we see an attractive setup in Allergan shares going forward based on a combination of attractive valuation, ongoing healthy organic growth and significant capital deployment optionality," JP Morgan analyst Chris Schott told Reuters.

There were disappointments too. Shares of Gap sank, last 11.8 percent weaker, after the apparel maker posted yet another decline in quarterly sales.

“The most concerning part of this narrative might be that management was surprised by the weak sales, which suggests further transformation likely lies ahead,” Simeon Siegel, an analyst at Nomura Securities, said in a note to clients, according to Bloomberg. “Gap’s business may simply be too large.”

In Europe, the Stoxx 600 Index ended the day with a 0.9 percent increase from the previous close. Credit Suisse Group shares jumped 5 percent after the bank reported a narrower-than-expected loss.

“Credit Suisse earnings weren’t great, but they were better than the worst of expectations," Michael Hewson, a London-based market analyst at CMC Markets, told Bloomberg.

France’s CAC 40 index added 0.4 percent, while Germany’s DAX index gained 0.7 percent, while the UK’s FTSE 100 index also rose 0.7 percent.

However, market sentiment might be misplaced, Hewson noted.

“The optimism is a little premature,” Hewson told Bloomberg. “Economic data hasn’t been very convincing."

Oil rose, rebounding after Monday’s decline, amid concern about supply issues in Canada and Nigeria.

"The market is getting support from the disruption in Canadian oil sands production and increased threats to output in the Niger Delta," Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut, told Bloomberg. "The underlying fundamentals remain weak. If not for supply disruptions and the decline in US production, prices would be lower.”

BusinessDesk.co.nz

Comments from our readers

No comments yet