We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
In the Global Week Ahead, the Q4 earnings bonanza rumbles on.
There are four industry groups with major Q4 company reports out this week.
In the U.S., we hear from major media and consumer products groups.
In Europe, we hear from big oil producers and renewable energy firms.
After the U.S. FOMC meeting wrap last week, global financial markets digest what the Reserve Bank of Australia and the Reserve Bank of India offer up.
Stock market bulls enjoyed a stellar January.
Where do we go from here?
Next are Reuters’ five world market themes, reordered for equity traders—
(1) A Stellar January Stock Market Run
It was a stellar start to 2023 for markets — stocks and government bonds enjoyed one of the best Januaries on record, fueled by optimism that the worst is over.
But will the bulls stay in charge?
Growth looking okay — tick; inflation slowing — tick; end to monetary tightening maybe in sight — tick.
So far so good.
January's metrics are key as they reflect how investors have set portfolios for the year ahead, though some reckon the month could mark no more than a spate of irrational complacency.
So far, markets seem unafraid to take on central banks, betting on the prospect of a unison pause in monetary tightening that could emerge later in the year — even though policy-makers have yet to make that promise.
German inflation and U.S. preliminary jobless and consumer confidence data could provide more direction for markets.
(2) In the U.S., S&P500 Q4 Earnings Keep Coming Out
Media and consumer industry stocks take their turn at the fore as another batch of U.S. results is set to land.
Walt Disney, which faces a proxy battle over board representation, and News Corp, which scrapped a plan to reunite with Fox Corp, are reporting on Wednesday and Thursday, respectively, with the New York Times also up on Wednesday.
Earnings from PepsiCo and Kellogg on Thursday will offer insight into how consumers are grappling with inflation.
All told, more than 90 S&P500 companies are expected to post results in coming days.
With 190 companies having reported, S&P500 earnings are set to have declined -2.4% in the fourth-quarter from a year ago — a steeper fall than the -1.6% drop predicted on Jan. 1 — according to Refinitiv IBES.
(3) In Europe, Big Oil and Renewable Companies Report Results
Big Oil lived up to its nickname in 2022, as disruption of supplies linked to Russia's Ukraine war and high prices translated into big profits — a record $200 billion, to be exact.
Shell (SHEL - Free Report) reported a record $40 billion profit last year. BP (BP - Free Report) , TotalEnergies (TTE - Free Report) and Norwegian state producer Equinor (EQNR - Free Report) are all due in coming days, as are "Big Renewables" including Danish wind-turbine maker Vestas and Germany's Siemens Energy.
Unlike their fossil-fuel counterparts, turbine and solar panel makers have struggled to pass on higher input costs though investors have yet to penalize them for that.
Over the last three years, the iShares Clean Energy exchange-traded fund (ICLN - Free Report) has risen by +120%, while the SPDR S&P Oil & Gas ETF has gained just +12%.
Oil and gas may have won the sprint, but not the marathon.
(4) Reserve Banks of Australia (RBA) and India Set Policy Rates
Markets have bet on another quarter point rate hike by the Reserve Bank of Australia on Tuesday, but the economic backdrop is less clear cut than a week ago.
Then inflation data stunned investors by shooting to a 33-year peak, defying the RBA's most aggressive tightening campaign in modern history. Macro readings shocked the other way as retail sales fell the most since the darkest pandemic days and house prices suffered their biggest drop since at least 1980.
The Aussie dollar's outlook is untarnished: as long as China's reopening is on track, the currency should push higher.
Meanwhile, the Reserve Bank of India's inflation fight may be over, with economists projecting another quarter point hike on Wednesday and then a pause.
(5) European and Canadian Central Bank (ECB) Speakers on Tap
And even if markets choose to ignore central bankers for now, that doesn't mean they won't listen to what officials say.
ECB policy-makers Peter Kazimir and Klaas Knot and the Bank of Canada's Tiff Macklem speak in coming days.
Jubilant markets — U.S. Treasury yields are down 50 bps so far this year — means a loosening of financial conditions that can undo some of the rate hikes.
That's not good for a central bank, nor is the idea that their communication is ineffective.
After all, what happens in markets, especially government bonds, ripples out to the broader economy.
With markets pricing in U.S. and European rate cuts by the year-end, central bankers are only too aware of the communication challenge they face.
Zacks #1 Rank (STRONG BUY) Stocks
I found big China tech and top European financial stocks on our #1 list this week.
(1) JD.com (JD - Free Report) : This is a $17 a share Chinese online direct sales company, with a market cap of $82.6B. I see a Zacks Value score of A, a Zacks Growth score of A and a Zacks Momentum score of B.
(2) UBS (UBS - Free Report) : This is a $17 a share Zurich, Switzerland-based banking company, with a market cap of $75.5B. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of B.
(3) Axa (AXAHY - Free Report) : This is a $32 a share international group of insurance and related financial services companies, with a market cap of $74B. I see a Zacks Value score of A, a Zacks Growth score of D and a Zacks Momentum score of C.
Key Global Macro
Not much is going to show up, in terms of macro data or policy events.
On Monday, Mainland China exports for JAN come out. The prior was -9.9% y/y. Mainland China imports for JAN come out too. I see a -7.5% prior there.
On Tuesday, Australia’s ANZ commodity price index for JAN comes out. I see a -2.0% y/y decline for JAN, weaker than the prior reading at -0.1%.
The Reserve Bank of Australia (RBA) gives up its a policy rate decision.
On Wednesday, the NY Fed’s Williams gives a speech.
The Reserve Bank of India sets its monetary policy.
On Thursday, a 2-day E.U. leader’s summit begins. Clearly, Ukraine will get discussed.
The European Commission releases its Economic Growth Forecasts.
On Friday, the preliminary University of Michigan consumer sentiment index for FEB comes out. A prior of 64.9 is in place.
Conclusion
To close matters up, here are Zacks Research Director Sheraz Mian’s key points:
(1) For the 191 S&P500 companies that have reported Q4-22 results, total earnings are up +1.5% from the same period last year on +7.2% higher revenues.
72.3% of companies beat EPS estimates and 67.5% beat revenue estimates.
(2) The proportion of the 191 S&P500 index members that beat both EPS and revenue estimates is 53.4%.
This 53.4% mark is well below the average for the preceding 20 quarters of 60.1%. The range over those 20 quarters, is a high of 81.7%, and low of 46.6%.
(3) Looking at Q4-22 as a whole, aggregate S&P500 earnings are currently expected to be down -6.4% on +4.7% higher revenues.
Excluding the Energy sector’s strong contribution, Q4 earnings for the rest of the index are expected to be down -10.4% on +3.7% higher revenues.
(4) For Q1-23, we expect S&P500 earnings go down -7.2% on +2.5% higher revenues.
This is down from -4% on January 6th and -2.9% in mid-December 2022.
(5) Looking at the calendar-year pictures, total S&P500 earnings are on track to be up +4.2% in 2022. Annual earnings then decrease -0.2% in 2023.
On an ex-Energy basis, a total of 2022 S&P500 earnings would be down -2.6% (instead of +4.2%, with Energy).
Annual 2023 earnings would be up +1.7% (instead of down -0.2%).
Happy trading and investing,
John Blank Zacks Chief Equity Strategist and Economist
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
More from Q4 Earnings: Global Week Ahead
In the Global Week Ahead, the Q4 earnings bonanza rumbles on.
There are four industry groups with major Q4 company reports out this week.
After the U.S. FOMC meeting wrap last week, global financial markets digest what the Reserve Bank of Australia and the Reserve Bank of India offer up.
Stock market bulls enjoyed a stellar January.
Where do we go from here?
Next are Reuters’ five world market themes, reordered for equity traders—
(1) A Stellar January Stock Market Run
It was a stellar start to 2023 for markets — stocks and government bonds enjoyed one of the best Januaries on record, fueled by optimism that the worst is over.
But will the bulls stay in charge?
Growth looking okay — tick; inflation slowing — tick; end to monetary tightening maybe in sight — tick.
So far so good.
January's metrics are key as they reflect how investors have set portfolios for the year ahead, though some reckon the month could mark no more than a spate of irrational complacency.
So far, markets seem unafraid to take on central banks, betting on the prospect of a unison pause in monetary tightening that could emerge later in the year — even though policy-makers have yet to make that promise.
German inflation and U.S. preliminary jobless and consumer confidence data could provide more direction for markets.
(2) In the U.S., S&P500 Q4 Earnings Keep Coming Out
Media and consumer industry stocks take their turn at the fore as another batch of U.S. results is set to land.
Walt Disney, which faces a proxy battle over board representation, and News Corp, which scrapped a plan to reunite with Fox Corp, are reporting on Wednesday and Thursday, respectively, with the New York Times also up on Wednesday.
Earnings from PepsiCo and Kellogg on Thursday will offer insight into how consumers are grappling with inflation.
All told, more than 90 S&P500 companies are expected to post results in coming days.
With 190 companies having reported, S&P500 earnings are set to have declined -2.4% in the fourth-quarter from a year ago — a steeper fall than the -1.6% drop predicted on Jan. 1 — according to Refinitiv IBES.
(3) In Europe, Big Oil and Renewable Companies Report Results
Big Oil lived up to its nickname in 2022, as disruption of supplies linked to Russia's Ukraine war and high prices translated into big profits — a record $200 billion, to be exact.
Shell (SHEL - Free Report) reported a record $40 billion profit last year. BP (BP - Free Report) , TotalEnergies (TTE - Free Report) and Norwegian state producer Equinor (EQNR - Free Report) are all due in coming days, as are "Big Renewables" including Danish wind-turbine maker Vestas and Germany's Siemens Energy.
Unlike their fossil-fuel counterparts, turbine and solar panel makers have struggled to pass on higher input costs though investors have yet to penalize them for that.
Over the last three years, the iShares Clean Energy exchange-traded fund (ICLN - Free Report) has risen by +120%, while the SPDR S&P Oil & Gas ETF has gained just +12%.
Oil and gas may have won the sprint, but not the marathon.
(4) Reserve Banks of Australia (RBA) and India Set Policy Rates
Markets have bet on another quarter point rate hike by the Reserve Bank of Australia on Tuesday, but the economic backdrop is less clear cut than a week ago.
Then inflation data stunned investors by shooting to a 33-year peak, defying the RBA's most aggressive tightening campaign in modern history. Macro readings shocked the other way as retail sales fell the most since the darkest pandemic days and house prices suffered their biggest drop since at least 1980.
The Aussie dollar's outlook is untarnished: as long as China's reopening is on track, the currency should push higher.
Meanwhile, the Reserve Bank of India's inflation fight may be over, with economists projecting another quarter point hike on Wednesday and then a pause.
(5) European and Canadian Central Bank (ECB) Speakers on Tap
And even if markets choose to ignore central bankers for now, that doesn't mean they won't listen to what officials say.
ECB policy-makers Peter Kazimir and Klaas Knot and the Bank of Canada's Tiff Macklem speak in coming days.
Jubilant markets — U.S. Treasury yields are down 50 bps so far this year — means a loosening of financial conditions that can undo some of the rate hikes.
That's not good for a central bank, nor is the idea that their communication is ineffective.
After all, what happens in markets, especially government bonds, ripples out to the broader economy.
With markets pricing in U.S. and European rate cuts by the year-end, central bankers are only too aware of the communication challenge they face.
Zacks #1 Rank (STRONG BUY) Stocks
I found big China tech and top European financial stocks on our #1 list this week.
(1) JD.com (JD - Free Report) : This is a $17 a share Chinese online direct sales company, with a market cap of $82.6B. I see a Zacks Value score of A, a Zacks Growth score of A and a Zacks Momentum score of B.
(2) UBS (UBS - Free Report) : This is a $17 a share Zurich, Switzerland-based banking company, with a market cap of $75.5B. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of B.
(3) Axa (AXAHY - Free Report) : This is a $32 a share international group of insurance and related financial services companies, with a market cap of $74B. I see a Zacks Value score of A, a Zacks Growth score of D and a Zacks Momentum score of C.
Key Global Macro
Not much is going to show up, in terms of macro data or policy events.
On Monday, Mainland China exports for JAN come out. The prior was -9.9% y/y. Mainland China imports for JAN come out too. I see a -7.5% prior there.
On Tuesday, Australia’s ANZ commodity price index for JAN comes out. I see a -2.0% y/y decline for JAN, weaker than the prior reading at -0.1%.
The Reserve Bank of Australia (RBA) gives up its a policy rate decision.
On Wednesday, the NY Fed’s Williams gives a speech.
The Reserve Bank of India sets its monetary policy.
On Thursday, a 2-day E.U. leader’s summit begins. Clearly, Ukraine will get discussed.
The European Commission releases its Economic Growth Forecasts.
On Friday, the preliminary University of Michigan consumer sentiment index for FEB comes out. A prior of 64.9 is in place.
Conclusion
To close matters up, here are Zacks Research Director Sheraz Mian’s key points:
(1) For the 191 S&P500 companies that have reported Q4-22 results, total earnings are up +1.5% from the same period last year on +7.2% higher revenues.
72.3% of companies beat EPS estimates and 67.5% beat revenue estimates.
(2) The proportion of the 191 S&P500 index members that beat both EPS and revenue estimates is 53.4%.
This 53.4% mark is well below the average for the preceding 20 quarters of 60.1%. The range over those 20 quarters, is a high of 81.7%, and low of 46.6%.
(3) Looking at Q4-22 as a whole, aggregate S&P500 earnings are currently expected to be down -6.4% on +4.7% higher revenues.
Excluding the Energy sector’s strong contribution, Q4 earnings for the rest of the index are expected to be down -10.4% on +3.7% higher revenues.
(4) For Q1-23, we expect S&P500 earnings go down -7.2% on +2.5% higher revenues.
This is down from -4% on January 6th and -2.9% in mid-December 2022.
(5) Looking at the calendar-year pictures, total S&P500 earnings are on track to be up +4.2% in 2022. Annual earnings then decrease -0.2% in 2023.
On an ex-Energy basis, a total of 2022 S&P500 earnings would be down -2.6% (instead of +4.2%, with Energy).
Annual 2023 earnings would be up +1.7% (instead of down -0.2%).
Happy trading and investing,
John Blank
Zacks Chief Equity Strategist and Economist