Weekly outlook: Tech titans Meta, Amazon and Alphabet report; BoE and EBC to meet

Key events for UK wealth managers for the week starting 31 January

|

Monday 31 January

-Quarterly results from Ryanair

-Trading statement from Evraz

-In the US, quarterly results from NXP Semiconductors

Tuesday 1 February

-First-half results from Joules

-Trading update from Virgin Money UK

-Monetary policy decision from the Reserve Bank of Australia

-Mortgage approvals from the Bank of England

-Purchasing managers’ indices (PMIs) for manufacturing industries from Asia, Europe, UK and USA

-US monthly car sales

-In Japan, quarterly results from silicon chip maker Rohm

-In Europe, quarterly results from Christian Dior and UBS

-In the US, quarterly results from Alphabet, ExxonMobil, UPS, Advanced Micro Devices, Starbucks and General Motors

Hargreaves Lansdown equity analyst Sophie Lund-Yates said expectations will be high for Alphabet’s results, given the pandemic-driven permanent increase in demand for digital advertising.

“Away from the core advertising business, Google’s cloud computing division has been growing very quickly. This is a potentially very lucrative and long-term source of income for Alphabet. If fellow cloud-provider, Microsoft’s, results are anything to go by, I’m expecting to see some strong growth on that front,” she said.

“Finally, eyes will be on the regulatory landscape. Recent anti-trust lawsuits in the US focused on anti-competitive practices in Search, and particularly Alphabet’s deal to put its search engine on Apple devices, were described as deeply flawed by Alphabet.”

Wednesday 2 February

-Trading updates from Glencore, Vodafone and Severn Trent

-EU inflation figures

-OPEC+ monthly production meeting

-ADP US monthly payrolls data

-US oil inventories

-In Japan, quarterly results from Sony and Hitachi

-In Asia, quarterly results from Alibaba

-In Europe, quarterly results from Novo Nordisk, Novartis, Banco Santander, Ørsted, Ferrari and Kone

-In the US, quarterly results from Meta Platforms, Qualcomm, Ford, Spotify and Royal Caribbean Cruises

Thursday 3 February

-First-half results from Renishaw

-Trading updates from Compass, BT and Cranswick

-Purchasing managers’ indices (PMIs) for services industries from Asia, Europe, UK and USA

-Monetary policy decision from the Bank of England

Economists and investors will not only be interested to find out if the BoE is set to raise rates, they “will also look for any comment of quantitative easing, where the Bank of England has currently committed £895bn to its asset purchase facility”, said AJ Bell investment director Russ Mould and financial analyst Danni Hewson.

“The US Federal Reserve is publicly raising the prospect of turning QE into QT, and it will be interesting to see if the Bank of England feels the need, or believes the UK economy is robust enough, to think in the same way.”

-Monetary policy decision from the European Central Bank

-US Challenger, Gray and Christmas monthly job losses data

-US weekly unemployment claims

-In Japan, quarterly results from Softbank and Nintendo

-In Europe, quarterly results from Roche, Siemens Healthineers, ABB, Intesa San Paolo, German silicon chip maker Infineon and Royal Dutch Shell

“With oil hitting $90 a barrel, a seven year high, it’s proving to be a buoyant time for oil majors like Shell,” said Susannah Streeter, senior investment and markets analyst at HL.

Prices are rising on the back of tight supply and geopolitical tensions in the Middle East and Ukraine, and these latest figures should show how Shell will use this cash windfall.

Streeter said: “The company has already been able to slice billions off net debt as the global recovery has got underway and oil prices have risen. But the company also is having to fund an increase in capital expenditure as it invests in new gas fields as well as alternative fuels like hydrogen. With wholesale gas prices set to surge further, particularly if the situation exacerbates in Ukraine this strategy is set to pay off.

“However, the amount Shell needs to invest to demonstrate it really is committed to a low carbon future will have to accelerate to keep up with ESG demands. If it doesn’t come up with the goods, and keep demonstrating progress in its results, it risks falling further out of favour among investors who have environmental concerns increasingly at the heart of their portfolios.”

After a “messy set of Q3 results”, AJ Bell’s Mould and Hewson said “analysts and shareholders will doubtless be looking for a tidier set of Q4 figures” from Shell.

“Those numbers were marred by more than $5bn of mark-to-market, paper losses on derivative positions used to hedge oil and gas prices. Despite surging oil and gas prices, stated pre-tax profit fell from $4.1bn in Q2 to $1.2bn in Q3. Underlying profit, on a current cost of supplies basis (CCS) was also hampered by output losses in the Gulf of Mexico in the wake of Hurricane Ida.”

-In the US, quarterly results from Eli Lilly, Merck, ConocoPhillips, Estee Lauder, Snap, Microchip, Hershey, Clorox and full-year results from Amazon

Much like Shell above, Amazon’s Q3 results “were generally seen as disappointing”, said Mould and Hewson.

Slowing e-commerce sales and rising costs resulted in the headline earnings per share figure halving year-on-year to $6.23.

“Chief executive Andy Jassy also warned that increased wage costs, global supply chain issues and increased freight and shipping costs would impact fourth-quarter and full-year earnings. Mr Jassy said that Amazon would incur ‘several billion dollars of additional costs’ in Q4 because of these factors.”

Mould and Hewson added: “Amazon’s quarterly earnings are notoriously volatile, not least because founder and now executive chairman Jeff Bezos never seemed to worry about them, as he stayed focused on the company’s long-term strategic, operational and financial goals and saw free cash flow as the optimal financial metric.

“Whether investors cut Mr Jassy as much slack remains to be seen, although they seem happy to do so right now, given the lofty valuation rating still afforded the stock and the rapid earnings growth expected of the firm in 2022 and 2023.”

Friday 4 February

-Trading statements from Airtel Africa and SSP Group

-Purchasing managers’ index (PMI) for the construction industry in the UK

-US non-farm payrolls, unemployment rate and wage growth

-In Europe, quarterly results from Sanofi and Carlsberg

-In the US, quarterly results from Bristol Myers Squibb

Latest Stories