EU avoiding recession in Q1

EU avoiding recession in Q1

During a much stronger session, the Nasdaq 100 led strong gains in the US markets. Alongside, Big Tech accounted for most of the gains as profits largely exceeded forecasts.

After the US markets closed last night, Amazon followed Meta Platforms’ lead. With a robust set of Q1 financial results, corp outperformed all its major business segments.

When Amazon released its full-year results three months ago, its projection was fairly cautious. It stated that it anticipated producing revenues between $121 billion and $126 billion. It was somewhat below estimates of $125.5 billion.

Net sales last night were $127.4 billion, up 9% from the same quarter the previous year. Sales in North America increased by 11% to $76.9 billion, undoubtedly aided by the robust recovery in US retail sales we observed in January.

As personnel decreased, operating expenses significantly decreased in Q1, down from levels of almost $60 billion in Q4 to $54.79 billion, but they are still greater than they were a year ago. Given the temporary hiring over the period between Thanksgiving and Christmas, Q4 does often have the highest level of spending.

We also witnessed a solid showing from AWS, whose cloud service revenues increased by 16% to $21.4 billion. Despite another minor write-down of $500 million from its Rivian holding, profits came in at $3.2 billion or $0.31 a share, exceeding expectations.

The outlook for Q2 guidance was also positive, with net sales expected to increase by between 5% and 10% to come in between $127 billion and $133 billion. However, there was a caution regarding future crowd growth, which restrained gains after hours.

US markets gain and EU GDP

However, the increase in US Treasury yields yesterday, with the US 2-year yield returning to above 4%, shows that we can still expect the Federal Reserve to raise interest rates by another 25 basis points next week. This might hurt US stocks.

Despite yesterday’s Q1 PCE data suggesting that this number could be higher, today’s PCE core deflator numbers for March are likely to confirm that forecast with an unchanged reading of 4.6%, while the PCE deflator is anticipated to decrease from 5% to 4.1%.

Personal spending is anticipated to decline from 0.2% to -0.1%.

It’s a significant day for Q1 GDP in the EU. There is some hope that Germany’s economy will avoid a technical recession after a recovery in the services sector helped to counteract a sluggish manufacturing sector.

The German economy contracted by -0.4% in Q4. Nevertheless, a mild winter decreased the strain. It may manage a 0.2% expansion.
After contracting by 0.1% in Q4, the EU expects its GDP to expand by 0.2% in Q1.