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Microsoft's long shadow, Tesla earnings, Adani allegations - What's moving markets

Economy Jan 25, 2023 07:00AM ET
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By Geoffrey Smith 

Investing.com -- Stocks are set to open lower after Microsoft reported slowing demand even for the fastest-growing parts of its empire. It's another big day for earnings, with Tesla headlining later on, and Boeing, NextEra Energy and Abbott due before the open. Germany departs from eight decades of pacifism, agreeing to ship its modern battle tanks to the world's hottest war zone. And short-sellers Hindenburg Research goes after India's richest man Gautam Adani, wiping nearly $10 billion off his group's value. Here's what you need to know in financial markets on Wednesday, 25th January. 

1. As Microsoft goes, so goes the U.S.…

Microsoft’s (NASDAQ:MSFT) earnings reinforced the impression that 2023 is going to be a tough year for business. The software giant, whose broad reach across the business and consumer segments of the economy makes it a decent proxy for the rest of USA Inc., said its revenue grew at the slowest rate in six years in the three months through December, the mid-point of its fiscal year.

Adjusted earnings were fractionally above expectations, but included a $1.2B restructuring charge related to the 10,000 job cuts it announced last week. But analysts were more concerned by the top line, where sales of Windows and Xbox-related services slumped as COVID-related factors ebbed. The company even expects a significant slowdown this year in its Cloud services division this year, which has been its strongest-performing segment in recent quarters.

Microsoft stock fell nearly 2.5% in premarket trading.

2. Tesla’s up next

Tesla (NASDAQ:TSLA) reports earnings after the closing bell, arguably facing its stiffest challenge yet in trying to justify a valuation that still far exceeds anything else in the auto sector.

The company has lost around half its value since its last quarterly update, with CEO Elon Musk repeatedly selling stock to fund his misfiring purchase of Twitter. Musk took the witness stand in a trial on Tuesday where he is accused of deliberately misleading investors with a tweet about a possible buyout back in 2018. He told the court he believed that he had funding for the buyout in place.

Tesla is expected to report adjusted earnings per share of $1.15, down from $2.54 a year ago, hurt by production disruptions and price cuts in the final quarter of last year.

3. Stocks set to open lower in Microsoft’s shadow; Abbott, IBM, Boeing all set to report later

U.S. stock markets are set to open lower later, as Microsoft’s lackluster outlook casts a long shadow over the rest of the market.

By 06:20 ET (11:20 GMT), Dow Jones futures were down 160 points, or 0.5%. While S&P 500 futures were down 0.7% and Nasdaq 100 futures were down 1.2%, with technology stocks coming under particular pressure.

Sentiment has not been helped by news of the Department of Justice charging Alphabet (NASDAQ:GOOGL) with abusing its market dominance of the online advertising industry, which is a significant expansion of the existing antitrust actions against the Google owner.

Other stocks due to report on Wednesday include Boeing (NYSE:BA), NextEra Energy (NYSE:NEE), IBM (NYSE:IBM), Lonza Group (OTC:LZAGY), Abbott Laboratories (NYSE:ABT), CSX (NASDAQ:CSX) and Norfolk Southern (NYSE:NSC), Freeport-McMoRan (NYSE:FCX) and Lam Research (NASDAQ:LRCX), among many others.

4. Scholz frees the Leopards

German Chancellor Olaf Scholz formally approved the shipment of Leopard 2 main battle tanks to Ukraine, a day after reports suggested that the U.S., too, has finally relented on including its Abrams M1 battle tank in future military aid packages.

The move was sharply criticized as an escalation of the conflict by Moscow, but warmly welcomed by Germany’s NATO allies, who have been exasperated at its reluctance to fill a vital gap in Ukraine’s arsenal.

Germany’s change of heart is a landmark in the evolution of its foreign policy, which has seen it shun any kind of leadership role in military affairs since World War 2. The move will put a sharp focus on Moscow’s reaction function, given its previous threats of using battlefield nuclear weapons.

The decision comes, ironically, on the birthday of Ukrainian President Volodymyr Zelensky.

5. Adani hit by short-seller claims, rebuts allegations

The sprawling empire of India’s richest man, Gautam Adani, was shaken by a report by short sellers Hindenburg Research, which accused it of various accounting tricks to inflate the value of its portfolio companies.

The flagship Adani Enterprises (NS:ADEL) holding company fell 1.1% in Mumbai, while the group’s ports and shipping arm lost over 6%.

Companies linked to Adani lost around $9B in market capitalization on the report, which the group’s chief financial officer described as “a malicious combination of selective misinformation and stale, baseless and discredited allegations,” according to the Financial Times.

Adani’s net worth is estimated at some $118B, tied largely to investments in fossil fuels and renewable energy.

Microsoft's long shadow, Tesla earnings, Adani allegations - What's moving markets
 

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Comments (10)
Hank Williams
Hank Williams Jan 25, 2023 1:10PM ET
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MSFT needs help.
Dave Jones
Dave Jones Jan 25, 2023 12:39PM ET
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The war in Ukraine must end soon. I pray for cooler heads to prevail. We need a JFK now more than ever.
Daimon van Buren
Daimon van Buren Jan 25, 2023 12:39PM ET
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Rushits must die and suffer for decades to come. Beat them like the dogs they are, then they might learn for a few years until they start biting their enablers again, as they always do.
Болдоо Болдоо
Болдоо Болдоо Jan 25, 2023 11:16AM ET
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enhbold
Tru Gfu
Tru Gfu Jan 25, 2023 10:23AM ET
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because the people posting comme ts here know so much...
Amrit Swarup Sarkar
Amrit Swarup Sarkar Jan 25, 2023 10:12AM ET
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heard Elon lost half of its fortune for his stupid decision of buying telsa. Seen Facebook lossing 25 percent intraday in 2022. Heard Fried was only 32 who did fraud in the name of crypto to file insolvency right in front of the nose of US authorities. Trump not paying taxes . What else..haha
Craig Dsouza
Craig Dsouza Jan 25, 2023 8:11AM ET
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Hes a fraud
Carl Michael Ashanti
Carl Michael Ashanti Jan 25, 2023 8:11AM ET
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Total Fraud...barefoot workers, dumping toxic waste, pollution..... the list goes on.
Ravi Kiran
Ravi Kiran Jan 25, 2023 8:08AM ET
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A person who advertises his trade position can't be trusted. He is desperate and looking for a way out.
simon meso
simon meso Jan 25, 2023 8:08AM ET
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thats how you operate?
Rajiv Sekhri
Rajiv Sekhri Jan 25, 2023 7:58AM ET
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This world is blessed to have Mr Gautam Adani as the best business brain.He is the kohinoor of the World, and Diamonds are always for Ever.
Love Teany068
Love Teany068 Jan 25, 2023 7:34AM ET
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Ch Hk
Ch Hk Jan 25, 2023 7:33AM ET
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chhinsamnang
 
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