FTSE up on resources rally, Facebook-owner Meta drags US stocks lower, and Amazon’s advertising disclosure excites the market

“US tech stocks endured their worst day since March 2020 overnight – led screeching lower by Facebook-owner which saw its stock market value collapse by a record amount for a US firm,” says AJ Bell Investment Director Russ Mould.

“Now was not the time to be releasing disappointing quarterly figures and the drop in Facebook users clearly spooked investors. All in all the company has endured a pretty horrible start to life under its new, much-derided name.

“The iffy numbers represent something of an outlier among its mega-cap tech counterparts with Amazon the latest of these rivals to beat forecasts with its own quarterly numbers after the Wall Street closed on Thursday. A hike in the cost of a US Prime account also demonstrated its pricing power.

“And if the markets were hoping for some respite they’re likely to be disappointed with the key US jobs data being released later this afternoon.

“The FTSE 100 made a good start on Friday amid all the drama. Resources firms and Shell led the market higher on strong energy prices, with European oil sites being hit by cyber-attacks only adding to the pressures on crude supply.

“Travel food hub operator SSP may have reported a big hit from Omicron but investors were largely content to look forward to sunnier horizons with a target of returning to pre-pandemic levels of profitability and sales growth by 2024.

“It helps that the business is no longer haemorrhaging cash, creating greater confidence that it can ride out any further disruption.

“London West End property investor Shaftesbury had some swing and swagger to befit a saunter down Carnaby Street as it reported a vacancy rate below 5% with the company outlining prospects for some uninterrupted trading growth.

“Shareholders will hope this can be sustained and that owning assets in this prime postcode of the capital becomes a gift rather than a burden.”

Amazon

“Amazon’s fourth quarter results could have been catastrophic for its share price, given how tech shares have reacted to news in recent weeks – either soaring upwards or crashing downwards.

“Sales of $137.4 billion were marginally below forecasts, and the $112 billion to $117 billion revenue guidance for the first quarter of 2022 was up to $8 billion below expectations. Those two points should have been enough in the current market to cause a big share price retreat, but Amazon did the opposite with a 14% gain in after-hours trading.

“A boost from the value of its investment in electric vehicle maker Rivian might have provided a sweetener to its results yet the real excitement came elsewhere.

“Amazon’s cloud computing arm beat expectations which is a relief given how the market has started to wonder if this space was becoming very competitive and harder to sustain high levels of growth. Furthermore, the decline in group operating margins wasn’t as severe as the market expected.

“The decision to put up prices for its Prime delivery/streaming membership service will help earnings during these inflationary times, and Amazon customers are likely to accept the higher costs without the blink of an eye given how so many people have become reliant on this service.

“Perhaps the most interesting bit of news was Amazon finally disclosing revenue for its advertising business for the first time. Advertising services grew 32% year on year to $9.7 billion in the fourth quarter. That’s more than double the $4.7 billion sales it generated from physical stores.

“This acts as further proof that Amazon is still capable of developing new ways in which to drive revenue; and doing so in major way. The market will now want to know just how big this part of its business can get – and as with everything the company does, expectations are likely to be high.”

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