Markets gear up for megatech earnings

All major US equity indices finished slightly above the flatline last Friday amid mixed corporate earnings results and as investors were cautious about the future of the Federal Reserve’s policy path. Stronger-than-expected manufacturing data report Friday belied some of the weaker economic numbers reported earlier in the week, contributing to a generally indecisive trading session. On the earnings front, Procter & Gamble posted better-than-expected profit but also spoke about a very difficult cost and operating environment. Meantime, European equity markets closed higher on Friday and booked a fifth consecutive week of gains.  

Summary as at 24.04.2023 

• Asian shares trended in a flat-to-low range on Monday, with caution setting in ahead of a week packed with economic data and central bank meetings, along with earnings from the tech giants. The S&P/ASX 200, Kospi, Hang Seng and Shanghai Composite all declined, while the Nikkei 225 rose. 
• European shares are on course for a flat start and US Equity futures inched down this morning as investors look ahead to a very busy week in terms of economic data and earnings reports. 
• Oil prices fell this morning in Asia and were moving close to a five-week low as concerns over rising interest rates and slowing economic growth largely dented expectations for a recovery in demand this year. 
• The S&P Global US Composite PMI rose to 53.5 in April, up from 52.3 in the previous month, to signal the quickest upturn in business activity since May 2022. The faster rise in activity was broad-based, with the services activity growth hitting a 12-month high and manufacturing output expanding modestly but at the fastest rate since May 2022. New orders at US firms increased at the sharpest rate for 11 months, despite a continued decline in new export orders, amid new client wins, improved customer confidence and successful marketing strategies.  
• Credit Suisse said this morning the equivalent of $68 billion left the bank in the first quarter, shedding light on the scale of the bank run that caused it to crumble and forced its state-engineered rescue. 
• Bed Bath & Beyond Inc filed for Chapter 11 bankruptcy protection on Sunday after the home goods retailer failed to secure funds to stay afloat. In March, the company said it would sell $300 million worth of its shares to raise more capital and might have to file for bankruptcy if it failed to secure the funds. 
• Procter & Gamble reported an EPS of $1.37 per share for the first quarter, about 5 cents above analysts’ forecasts, as well as stronger-than-expected revenue of $20.7 billion. The company also raised its outlook for 2023 organic sales growth to 6% from its earlier forecast of 4% to 5%. Its shares rose more than 3% on Friday. 
• Schlumberger reported net income of 63 cents per share, beating analysts’ forecasts of 61 cents, as well as higher-than-expected revenue. However, the oilfield service company’s shares fell more than 4% on Friday after suggesting the North American onshore market may plateau this year. 
• Freeport-McMoRan reported a profit of 46 cents per share at the end of last week, which was better than analysts were expecting but still down by about half from a year earlier. The company’s mining volumes and supply chains were hampered by extreme weather and protests in Peru. Shares fell more than 4% on Friday. 
• The US earnings season will kick into a higher gear this week with Microsoft, Alphabet, Amazon, Coca-Cola, Visa, Boeing, Mastercard, and Exxon Mobil set to report. Also, in the US the spotlight will be taken by advance estimate for Q1 GDP growth rate, personal income and spending, PCE price index, durable goods orders, and new home sales. Elsewhere, the GDP figures will be released for France, Euro Area, Germany, Spain, South Korea, and Mexico. Finally, investors will closely follow inflation for France, Spain, Germany, and Australia and monetary policy decision in Japan.