Amazon Shares Opening Lower

Shares in US tech giant Amazon are trading a little lower ahead of the open today, despite the broadly positive tone to risk markets. The company is suffering amidst news that it plans to slash factory space and staff numbers in a bid to offset slowing sales growth. The company has reportedly abandoned several existing facilities as well as several other planned warehouse projects. So far the number of facilities (both existing and planned) which have been scrapped is 42.

Over the course of the pandemic, Amazon rapidly grew both its real estate presence and delivery network in response to surging demand. However, with physical shopping having returned and with the cost-of-living crisis taking hold, that demand is now fading quickly, hitting Amazon’s sales and leaving them with an excess of warehouse space as well as delivery staff.

Amazon shares are now trading just above where they were before the company reported Q2 earnings. Market reaction to that report was mixed with Amazon posting a drop in EPS but an upside surprise in revenues. Looking ahead, investors worry what impact rising inflation and the ongoing cost-of-living crisis will have on performance.

Technical Views

Amazon

Following the failure above the 137.81 level, amazon shares have since reversed sharply lower and are now testing the rising trend line from year to date lows, underpinned by the 123.79 level support. While this area holds, a further leg higher is still viable. However, with MACD and RSI bearish, should price slip below here the YTD lows around 103.36 are back in view.