Research Market strategy
By Swissquote Analysts
Published on 26.01.2022
Morning news

Microsoft Earnings Grew Last Quarter with Demand for Cloud Services

Topic of the day

Microsoft Corp. said its earnings continued to grow last quarter as its cloud-services business stayed strong. On Tuesday, the Redmond, Wash., software giant said its sales in the quarter ended in December hit $51.7 billion, up 20% from a year earlier. Its net income rose 21% to $18.8 billion. The results beat predictions from analysts, who were expecting $50.7 billion in revenue and $17.5 billion in net income, according to FactSet. Microsoft’s overall cloud revenue increased 32% from the year-earlier quarter to $22.1 billion. Its cloud-infrastructure service, called Azure, grew by 46%, down slightly from the prior quarter’s 48% growth. For the period, Microsoft expects sales of $48.5 billion to $49.3 billion, compared with analyst expectations of $48.1 billion, according to FactSet. Microsoft shares initially fell in after-hours trading, but then rebounded to a gain of more than 1% after the company issued its outlook for the current quarter.

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Swiss stocks

The Swiss stock market made up a small part of its drastic previous day's losses on Tuesday. The SMI gained 0.5 per cent to 11,946 points. Among the 20 SMI stocks, there were 14 price gainers and six price losers. 55.71 (previously: 69.11) million shares were traded. Meanwhile, the balance sheet season is also picking up speed in Switzerland. Logitech was a convincing performer. The share price rose by 6.1 per cent after the manufacturer of computer accessories not only published surprisingly good business figures, but also raised its outlook. Swisscom shares, which are considered defensive, were also bought and rose by 2.5 per cent. Givaudan rose 0.6 per cent. The prospect of rising interest rates gave a tailwind to insurers' shares. Swiss Life, Swiss Re and Zurich posted gains of between 2.0 and 2.7 per cent. Among banks, UBS rose by 1.6 per cent. Meanwhile, a profit warning pushed Credit Suisse's share price down by 0.9 per cent. Among the second-line stocks, Swatch fell by 3.9 per cent.

International markets


The European equity indices recovered some of the ground lost the previous day on Tuesday, but geopolitical tensions in Ukraine and the prospect of monetary tightening by the Federal Reserve (Fed) continue to put pressure on the markets. The Stoxx Europe 600 index gained 0.7% to 459.6 points, after plunging 3.8% on Monday. In Paris, the CAC 40 and SBF 120 rose 0.7% and 0.6%, respectively. In Frankfurt, the DAX 40 rose 0.8% while London's FTSE 100 gained 1%. Unilever PLC said it would restructure its operations into five stand-alone divisions, reshuffle top executives and cut jobs in a sweeping reorganization aimed at accelerating sales growth as the Dove soap owner girds itself against an activist investor and looks to quell shareholder dissatisfaction. The company said Tuesday it would now run as five, category-focused divisions—beauty and well-being, personal care, home care, nutrition, and ice cream—rather than its three previous units of food and refreshments, beauty and personal care, and home care. Ericsson AB on Tuesday posted a fourth-quarter net profit that beat expectations, as strong sales of 5G equipment in North America, Europe and Latin America helped offset a hefty sales decline in mainland China. The telecommunications-equipment company reported net profit attributable to shareholders of 10.08 billion kronor ($962.4 million), compared with SEK7.52 billion a year earlier. Sales rose 2.5% to SEK71.33 billion despite the heavy sales fall in mainland China and a drop in patent royalties as intellectual-property income was weighed on by an expired licensing contract, the company said.

United States

The New York Stock Exchange ended lower on Tuesday after further heavy selling in the technology sector ahead of the Federal Reserve's (Fed) monetary policy decision. The Dow Jones Industrial Average (DJIA) closed down 0.2 percent at 34,297.73 points, although it had moved into the green by the end of the session. The broader S&P 500 index fell more sharply by 1.2% to 4,356.45 points and the technology-heavy Nasdaq index fell by 2.3% to 13,539.29 points. Microsoft Corp. continued to benefit from the shift toward remote work last quarter, analysts said, as its cloud business likely boosted profits. The software giant is expected to announce around $50.7 billion in sales for the three months through December, up around 18% from a year earlier and close to 13% growth in net income to $17.5 billion, according to analysts surveyed by FactSet. 3M stock was inching higher in premarket trading after the company reported a better-than-expected fourth quarter financial performance. A solid end to 2021 is great, but investors want to hear about 2022. They’ll have to wait a little longer to hear what 3M thinks about the coming year. 3M (ticker: MMM) stock was rising 0.6% to $173.76 in premarket trading. S&P 500 and Dow Jones Industrial Average futures fell 0.8% and 0.3%, respectively. 3M reported fourth-quarter earnings on Tuesday of $2.31 a share and free cash flow of $1.5 billion from $8.6 billion in sales. Wall Street was looking for $2.01 a share and $1.3 billion in free cash flow from $8.6 billion in sales.


The wait for the US Federal Reserve dominates events on the East Asian stock exchanges on Wednesday. Once again, negative US forecasts - especially for technology and growth stocks - are largely shaken off, and after the heavy losses of the previous day, most indices tend to hold their ground. There is no trading in Sydney due to a public holiday. While in Tokyo the Nikkei index is only 0.2 per cent down at 27,081 points after recovering from the day's lows, the indices in Seoul, Shanghai and Hong Kong are moving slightly upwards. Singapore and Malaysia tend to be friendly.


The 10-year Treasury yields was unchanged. Investors are looking at the Fed meeting and presser, with some discussion about whether policy makers are seeing any reason to speed up monetary tightening, or rather to get a little more dovish after the Omicron impact.


UBS lowers the Zalando target to EUR 96.50 (101) – Buy
UBS raises Natwest to Buy (Neutral) – Target 290 (230) p
UBS raises the HSBC target to 590 (500) p – Buy

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