Weekly outlook: Tech titans Microsoft & Tesla to report

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20 January 2023

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Monday 23 January

– Trading statement from South32
– In the US, quarterly results from Johnson & Johnson, Verizon, Texas Instruments, Raytheon, 3M, Halliburton, Baker Hughes, GE and Wolfspeed

Tuesday 24 January

– Trading statement from Saga
– Flash purchasing managers’ indices from Asia, Europe and the UK
– Japanese inflation
– Microsoft Q2 results

Microsoft will announce its Q2 results on Tuesday. In October, the firm reported a first quarter that saw profits fall due to a drop in demand coupled with higher costs.

Hargreaves Lansdown equity analyst Matt Britzman said: “We’re expecting to see second quarter revenue of $52.35bn-$53.35bn, a miss could add pressure considering this guidance was already some way below expectations when it was issued in October.

“We’ll also be on the lookout for any information about the potential acquisition of a stake in OpenAI, for around $10bn. OpenAI grabbed headlines with the launch of ChatGPT, an AI system that can answer questions in a human like interaction. The implications of the underlying technology could be far reaching and this deal, along with the implied valuation of OpenAI, mark a potential turning point for broader adoption of artificial intelligence.”

– UK government borrowing figures
– In Europe, quarterly results or trading updates from ASML, Alstom and Tod’s
– In the US, quarterly results from AT&T, IBM, Boeing, LAM Research, CSX, Freeport-McMoRan, Kimberly-Clark, United Rentals, Las Vegas Sands and Levi Strauss

Wednesday 25 January

– Full-year results from Watkins Jones
– Trading statements from easyJet, Tullow Oil, Fresnillo and JD Wetherspoon
– German Ifo economic sentiment survey
– Belgian Courbe Synthetique business sentiment survey
– Interest rate decision from the Bank of Canada
– US oil inventories
– Q4 results from Tesla

On Wednesday, American automotive giant Tesla will disclose its results for Q4. The firm suffered a share price crash of almost 70% from its November 2021 peak.

AJ bell investment director Russ Mould and financial analyst Danni Hewson said while much of the blame for the plummeting share price has been placed on founder Elon Musk’s (pictured) takeover of Twitter, the reasons may be more complex.

They said: “This convenient narrative overlooks a rather less convenient one, namely that inventories have been growing. Tesla has been cutting prices to shift its Model 3 and Model Y cars and analysts have been cutting profit forecasts in response.

“It may be that lockdowns in China have taken their toll on an important market for the company and it is possible that demand bounces back in 2023. Equally, Tesla has imposed a hiring freeze and unconfirmed reports of a second round of layoffs refuse to go away. And when a stock trades on more than 30 times earnings, as Tesla does, such a rating means investors are looking for profit growth to come from sales, not cost cuts.

“It may also be that Tesla’s stock has simply blown off the pandemic-lockdown froth that built up during 2020-21, as central banks and governments threw money at the global economy and consumers, and a lot of it ended up in stock market speculation thanks to the meme-stock and Reddit crowd. The share price has, ultimately, just about round-tripped its way back to where it started before the pandemic, now that central banks are raising rates and draining liquidity via quantitative tightening, and governments are threatening to raise taxes and not hand out stimulus.”

Susannah Streeter, Hargreaves Lansdown senior investments & markets analyst, added: “The carmaker clearly needs some razor-sharp focus at a time when it’s being shaken by expectations of falling demand in China, the world’s largest car market, where it already has some formidable rivals such as BYD. There are hopes that the easing of the zero-Covid policy will smooth out the path for Tesla ahead, which has helped lift shares in recent weeks.

“Investors will be searching for signs that there is indeed a brighter outlook for China than in this update. However, any significant improvement in the outlook is likely to be delayed by worries about rising infection rates across the vast country, which are adding to production concerns.”

– In Asia, quarterly results from silicon chip maker SK Hynix
– In Europe, quarterly results from LVMH, SAP, Atlas Copco, Volvo and STMicroelectronics
– In the US, quarterly results from Visa, Mastercard, Intel, KLA-Tencor, Archer Daniels Midland, Rockwell Automation, McCormick, Southwest Airlines and Royal Caribbean Cruises

Thursday 26 January

– Trading statements from 3i, Entain, Wizz Air, Fevertree Drinks, Foxtons, CVS Group and Britvic
– US Q4 GDP growth data
– US consumer durables orders
– US weekly unemployment claims
– US new homes sales
– In Asia, quarterly results from LG Electronics
– In Europe, quarterly results from H&M, SCA, SSAB and Zardoya Otis
– In the US, quarterly results from Chevron, Conoco-Phillips, American Express and American Airlines