Facebook parent Meta Platforms plunged 26% Thursday as younger generations abandon an app their parents use. The damage? It erased more than US$200 billion from the technology company’s market capitalization about the total value of McDonalds. Investors sold shares as fourth-quarter earnings revealed that user and revenue growth had slowed. Heavy spending in the metaverse, a planned virtual reality space, also dented margins. Analysts see a buying opportunity, as shares of the wide-moat tech company trade at a 20% discount. Senior equity analyst Ali Mogharabi says the underlying operating business remains healthy and slow ad revenue growth will be of short duration.
Aviva costs the market £900m after the GSK settlement
Australia’s oldest bank posted a muted rise in quarterly profit as its big book of fixed-interest loans dragged on margins. Westpac says its half-year profit was $1.58 billion, up 10% on the second half of FY 2021 before impairments. Senior equity analyst Nathan Zaia described the outcome as “ok” , further attributing declining margins to the bank’s earlier decision to buy market share with fixed rate lending. As Westpac unwound that strategy, loan growth has slowed. Zaia is positive on the four-star stock, noting that ongoing cost-cutting efforts and rising interest rates will benefit the bank’s fortunes. The stock added 2 percent on the session and finished the week up 5.4 percent.
Brussels says gets the green light for natural gas
Natural gas is now getting the green energy tick as the European Commission published the final text of its “taxonomy for sustainable finance”, which rates the environmental sustainability of industries. The natural gas must, to count, displace coal power and produce below a certain limit of CO2 emissions. The Australian Petroleum & Exploration Association is citing the decision to push for more oil and gas exploration – despite the sector coming under fire from environmentalists over its emissions.
Doves are looking scarce
The screws of monetary policy are tightening. On Thursday, the Bank of England increased its key rate to 0.5 percent, with some committee members pressing for an even bigger increase. In remarks on Wednesday, Reserve Bank Governor Philip Lowe said an increase in the cash rate was “plausible.” His comments follow a speech in December in which he said the conditions for a rate hike wouldn’t be in place in 2022. That could spell a nasty surprise for the 1.1 million Australian homeowners who have never seen a rate hike. Since 2010, the cash rate has been cut eighteen times by the Reserve Bank of Australia, during which period 1.1 million first-time home buyers signed new loans, according to data from RateCity.
Rio Tinto back in the news but for all the wrong reasons
Just under two years on from the destruction of the Juunkan Gorge, Rio Tinto has crashed into a second scandal. The miner is accused of a culture of bullying, sexism and racism and multiple reports of workplace rape and sexual assault, a bombshell review done on the company’s behalf by Australian Sex Discrimination Commissioner Elizabeth Broderick found. The eight-month study, which found that big swathes of the workforce have faced sexual harassment and racism in the workplace, was conducted by surveying more than 10,000 people. The review found 21 instances of women reporting actual or attempted rape or sexual assault. Rio Tinto said it intends to adopt all 26 recommendations from the report. Stocks dropped 2.7% on Tuesday, the day the report came out, but finished the week 2.9% up.
Go home only when the bells ring
Some of the most frenzied action in US markets this week happened after the closing bell. Amazon’s stock soared 14 percent after it posted robust earnings in cloud computing and announced a price increase for its popular Prime membership scheme. Social media company Snap was down 23% intraday before recovering losses after the close, shares soaring 59% after hours after reporting its first-ever quarterly profit. After hours trading happens between brokers and various other financial entities through electronic communication networks (ECNs) that are not linked to the exchanges.
