Must read: stellar session on Wall Street, Amazon, Pearson

Our head of investment rounds up the morning's big news.

GLOBAL MARKETS 

After the fourth session in a row in the red, the FTSE 100 is set for a higher open following a busy week for corporate earnings, with Deutsche Bank AG (XETRA:DBK) and Barclays (LSE:BARC) beating expectations on Thursday. 

Lloyds’ Business Barometer of confidence hit an 11-month high in April as corporate sentiment picks up from the previous month. It found that wage growth hit a seven-month high while more than half of companies surveyed plan to increase prices over the next year, raising the risk that inflation could linger for longer despite a reduction in cost pressures. 

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The Bank of Japan has stuck to its ultra-loose monetary policy and  announced a review of its framework, as new Governor Kazuo Ueda asserts his lead position at the central bank. 

Despite US growth figures for the first quarter which slowed to 1.1% versus 2.6% in the final three months of 2022, the S&P 500 enjoyed its best day since January. The Nasdaq Composite closed 2.43% higher after Meta Platforms Inc Class A (NASDAQ:META) soared almost 14%, thanks to stronger-than-expected quarterly revenue, helping the stock to extend this year’s gains. US futures suggest Wall Street could give back some of those gains at the open stateside after Amazon’s cloud outlook disappointed. 

AMAZON 

After initially jumping 10% in the post market session, Amazon.com Inc (NASDAQ:AMZN) fell over 2% after-hours following a mixed set of results. First-quarter group revenue hit $127.4 billion, outpacing analysts’ expectations. Advertising and Amazon Web Services also came in ahead of forecasts. However, it warned that cloud spending would slow in the current quarter amid ‘these tough economic conditions.’ 

Like many tech businesses, Amazon is in the middle of carrying out heavy job cuts to slim down its cost base amid the challenging macroeconomic backdrop. Shares in Amazon fell over 50% in 2022 caught up in the ‘tech wreck’ amid the rising interest rate and inflationary backdrop. However, shares have been rebounding this year, up around 28% so far in 2023.

PEARSON 

Pearson (LSE:PSON)’s first-quarter trading update saw each of its divisions come in either in line or ahead of its expectations. The education publishing business said its on track to deliver £120 million of cost savings this year and reaffirmed its full-year guidance. It plans to return cash to shareholders through its £300 million share buyback programme in the second half of the year. 

While assessment and qualification sales grew by 6%, and English language learning increased by 66%, its online programme management (OPM) drove a 14% drop in virtual learning sales and higher education sales fell 5%. Its new talent investment platform will be launched later this year. Pearson continues to focus on upskilling and reskilling as a key global opportunity. 

Pearson was a star stock market performer last year, but that momentum has tailed off, with the stock down around 10% so far in 2023. In March, the company disappointed investors by refraining from announcing another share buyback. Today’s buyback announcement will likely be well received by shareholders. 

Pearson is building a workforce skills platform that with the support of its recently acquired Faethm which assesses corporate skills needs, it hopes will grow to become the go-to destination to help businesses upskill their staff. However, there is stiff competition from rival Cengage which is also moving into workplace training.