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FTSE 100 lower as Amazon the latest big tech name to disappoint

by LLB Reporter
28th Oct 22 10:55 am

Having held the line for most of this week the FTSE 100 finally caves to the negative pressure from big tech disappointments across the pond

The FTSE 100 may be underrepresented on the technology front but the wider hit to sentiment from some of the world’s largest companies dropping the ball couldn’t be entirely avoided.

One of the Federal Reserve’s most closely followed measures of inflation is out later on and it may help set the scene ahead of a crunch interest rate meeting next week when a 75 basis point increase is seen as a racing certainty.

AJ Bell head of investment analysis, Laith Khalaf, said:  “Elon Musk’s gnomic statement that ‘the bird is freed’ is arguably less interesting than how exactly he might make the business more profitable and whether a potentially looser regulation of the platform might help with that. Reportedly firing most of its top executives certainly suggests a significant change in direction.

“Inflation could be the Grinch which stole Christmas for many retailers and, it turns out, Amazon is no exception.

“Warnings of a weak festive period may have taken the headlines, but it’s actually the disappointing performance of the group’s big growth engine – its Amazon Web Services cloud computing arm –which has got investors worried.

“This part of the group has just experienced its weakest growth on record and revenue and profit came in materially below analysts’ expectations. There was some warning for this disappointment given Microsoft’s own cloud computing division struggled in the third quarter too.

“Margins are under pressure as customers increasingly focus on cost and while this is still a fast-growing and lucrative business, there’s a sense the market is having to reset some pretty elevated expectations.”

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